3941 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3942 DISCUSSION ON THE GOVERN- independence of their judgment, for the MENT RESOLUTION ON THE LIFE admirably clear analysis of the various issues INSURANCE CORPORATION that were involved and for the fairness with INQUIRY which the Commission dealt with every issue. Sir, my regret is great that the Government, in MR. CHAIRMAN: Half an hour is the its final Resolution, did not see its way to the maximum for you. acceptance, to the unreserved acceptance, of the conclusions of the Commission. I am not SHRI B. SHIVA RAO (Mysore): Mr. interested in Mr. Patel as an individual. But I Chairman, Sir, I move: am interested, and I hope the House is interested vitally, in the treatment that is meted out to a civil servant who has put in 35 "That the decisions of the Government of years of distinguished service in many fields, India on the findings of the recent inquiry a man of unusual ability, great drive and into certain affairs of the Life Insurance resourcefulness and integrity. It is not good Corporation as embodied in Government enough to be told at the end of that long Resolution No. F. 15|58-HS, dated the 27 period of service: "You may go because th May, 1959, be taken into consideration." although six Members of the Commission have completely exonerated you, one Member Sir, my main purpose in giving notice of of the Commission has said without this motion is to invite the attention of the supporting his conclusions, that you have House and also of the Government to some been reckless and defiant." general issues of far-reaching importance which seem to me to arise out of this unhappy Sir, in the past, the Government had been episode. But before I refer to them, I would utilising the services of this defiant and like very briefly to deal with one reckless civil servant, when complicated misconception which seems to die hard. Sir, problems arose immediately after partition surprise has been expressed in the course of and assets and liabilities had to be divided the debate in the other House and outside that between India and Pakistan. And this defiant - the Public Service Commission should have and reckless civil servant was asked to take sat in judgment over the report of the Bose charge of the situation in the capital when life Board, a body which was presided over by an was insecure and we owe it very largely to his eminent judge of the Supreme Court and that initiative that things did not get worse in the it should have been regarded as a court of dangerous period following partition. appeal from the findings of the Bose Board. Sir, with regard to the general issues to Sir, in the first place, I would like to point which I referred, there are, I think, three. One out that this Board was only a Board of is as regards the procedure to be adopted in Enquiry. It did not take evidence on oath; and cases of this kind in future. I rule out cases in under the Constitution, the report of such a which there have been allegations of Board must be referred to the Public Service corruption or mala fides. In such cases the Commission before the Government takes ordinary law of the land must take its normal final action. I regret to say that many harsh course. But there may be cases in which there things have been said about the Public Service are no allegations of any corruption or mala Commission in this connection and therefore, fides. In this case neither the Chagla I think it will not be out of place for me to say Commission nor the Bose Board nor the that so far as I am concerned, I pay a very Public Service Commission have ever sincere tribute to the Members of that suggested that there was any corruption or Commission for the objectivity of their mala fides on approach, for the courage of their convictions, for the 3943 Life Insurance [ RAJYA SABHA 1 Corporation Inquiry 3944 [Shri B. Shiva Rao] the part of any board of three senior retired officials to hold a individual. Therefore. Sir, the question of formal enquiry. That board held that procedure has to be determined in regard to incorruptibility and efficiency are the two all such cases in future. obvious requirements in administration. "In the present case corruption has not been in The second point of general importance question, inefficiency has." And then the seems to me to be the precise relationship board suggested that the senior-most official betwen the Minister and his civil servants. who was most responsible for this transcation And the third is Parliament's responsibility in should be transferred. That was the dealing with reports of the kind that have been punishment meted out to him, that he should placed before us and the manner in which we be transferred from one Ministry to another, discharge our responsibilities. so that his experience and knowledge may not be lost to the State. I would like to refer very briefly io a case which attracted much attention in England in What did the Minister of Agriculture do the last three or four years, a case which bears when this report came to his hands? He did a striking similarity to this LIC case in some not issue a statement from a distance of its essential features. In that case Sir, which defending himself and sacrificing his officials. is known as the Crichel Down Case, the The Minister went to the House of Commons Minister of Agriculture had to agree, under to shield his officials from harsh criticism by pressure from the House of Commons, to the the Board and also by certain members of the appointment of an enquiry into the conduct of Opposition. He said: certain officials who were supposed to have misled him into taking an unsound decision. Finally the Prime Minister appointed a single- "I, as Minister, must accept full man commission, a legal authority of responsibility to Parliament for the standing, to hold a preliminary and in camera mistakes and inefficiency of officials in my enquiry into the facts of the case. That Department, just as when my officials bring Commission reported and I am quoting one off any successes on my behalf, I take full sentence from that report: credit for them. Any departure from this long-established rule is bound to bring the "the true facts and considerations were Civil Service right into the political arena, not fully brought to the Minister's notice". and that we should all, on both sides of Ihe House, deprecate most vigorously" The report also says that there was a deliberate reluctance on the part of his Sir, this was the view expressed by the officials to invite the attention of the Minister Minister of Agriculture in handing in his to the financial unsoundness of a particular resignation. transaction. But the Commission was satisfied—and here again I quote— SHRI BHUPESH GUPTA (West Bengal): "there was no trace in this case of Did he write any pamphlet and distribute it? I anything in the nature of bribery, am just making an enquiry. corruption or personal dishonesty". That, Sir, was the first stage of the enquiry, MR. CHAIRMAN: Order, order. the in camera preliminary investigation. And on the basis of that report, the Prime Minister SHRI B SHIVA RAO: From the side of the went to the next stage and appointed a Opposition came a very remarkable statement from Mr. Herbert Morrison, at one time himself Home Secretary in the Labour Government. Mr. Herbert Morrison said: 3945 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3946 "The morale and the efficiency of the in order to give the officials concerned all Civil Service can be hurt in two ways. It facilities for fair defence, the first step that can be hurt by a failure to check something should have been taken was for Mr. which interferes with its work and it can be Krshnamachari to have handed in his hurt by an unjust denunciation of the whole resignation. To be fair to him, I think he did service". so, though at what stage I cannot tell, because he himself has not made that point clear. But Finally, Sir,—and this is a very important to be fair to him, Mr. Krishnamachari did aspect of that debate to which I call the offer his resignation at the time of the Chagla attention of the House—the Home Secretary, enquiry. Unfortunately, the Prime Minister I mean the present Home Secretary, whom we did not accept his resignation and it was Mr.. call the Home Minister here, laid down Krishnamachari who appointed Justice certain principles which must apply in all Chagla to be the single-man commission. And cases, governing the relations between the the report of the Chagla Commission was M'nister and his Civil Servants. He said: again submitted to Mr. Krishnamachari. That, I am afraid, prevented all the facts from "In a case where there is an explicit coming to light. order by a Minis'.er, the Minister must protect the Civil Servant who has carried I will quote one paragraph from the Bose out his order. Equally, where the Civil Board's Report on this subject. Servant acts properly in accordance with the policy la;d down by the Minister, the "In endeavouring to ascertain the truth . Minister must protect and defend him." . ."

And then he said: I am quoting from page 160 of the Bose Board's Report. "But where action has been taken by a Civil Servant of which the Minister disapproves and has no prior knowledge, "In endeavouring to ascertain the truth, and the conduct of the official is we have been labouring under a great reprehensible, then there is no obl:gation on disadvantage. The Chagla Enquiry the part of the Minister to endorse what he preceded ours and except for a few believes to be wrong, or to defend what are witnesses, almost all those that were clearly shown to be errors of his officers." examined before us had already been examined in the other Enquiry on oath, and These are the main features of the Crichel having committed themselves to one story Down Case. on oath, they were tied down to what they had already said and at that time Mr. Krishnamachari was still in office. He had So far as the LIC case is concerned —I do not resigned. So, it is possible that some of not say it in any spirit of criticism of the those who appeared as witnesses in the Government,' and maybe I am becoming wise other Enquiry were afraid to disclose all after the event but I would suggest that it is that they knew." necessary to become wise after the event—I hope that the Government, at least in the future, will lay down a well-defined Sir, this is a paragraph from the Bose Board's procedure for dealing with all such cases. Report. For the rest of the story, so far as the What did the Government do when the debate Enquiry before the Chagla Commission is in the other House took place in December, concerned, I shall refer to a paragraph or two 1957? In the first place, I think, from the Report of the Public Service Commission—the summary of Mr. B. K. Nehru's evidence as given before the B'ose Board; 3947 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3948 [Shri B. Shiva Rao.] " . . he would like to make a very short Incidentally, Sir, I doubt very much statement cutting most of the background whether if Mr. Krishnamachari had been in as it were and keeping to the essentials. office, Mr. Nehru and Mr. A. K. Roy, the two Then he drafted the statement himself most important witnesses before the Bose which was much shorter." Board, on whose evidence the U.P.S.C, relied very heavily in coming to its conclusions, He kept one copy with himself and gave one would have had the courage to come forward to Mr. B. K. Nehru. Half-an-hour later, this and give evidence. That apart, the U.P.S.C.'s was taken back from Mr. Nehru and, Report summarises Mr. Nehru's evidence in therefore, no copy of that shorter draft the following words: statement was available to be filed as an exhibit before the Bose Board; but, Sir, even "Shri Nehru went to Bombay with Shri that short draft, according to Mr. Nehru's B. K. Kaul. There they met Sarvashri Patel, evidence—and here may 1 remind the House Kamat, Bhattacharya, Vaidyanathan and that Mr. Nehru is a very brilliant officer of the Sachin Choudhury, the Counsel for the Government of India who is now serving as a L.I.C. in Shri Bhattacharyya's house. At kind of roving ambassador in the field of that stage, each one of them had prepared international finance? No one has ever his Own statement, and so far as Shri accused him either of lack of integrity or of Nehru could remember, there was nothing deviating from the truth—even the short draft contradictory in them." contained the statement by the Minister that on two separate occasions the Minister had But he had been sent down to Bombay by the given his consent to the purchase of these Finance Minister in order, as the Commission shares. Sir, I shall only read a few extracts put it, to help in the presentation of the case, from Mr. Ch'oudhury's draft statement, the bringing the various people together and original statement, copies of which had been having a discussion with them. And what given to Mr. Patel, Mr. Kamat and Mr. happened in Bombay? All these gentlemen Bhattacharyya with the impression that they met again the next day, and "it was would be the statement to which Mr. decided"—these are Mr. Nehru's words Krishnamachari would adhere in giving evidence before Mr. Justice Chagla. Even the "It was decided thet there should be a shorter statement contained the essence of the statement prepared on behalf of the longer statement. These are some of the Finance Minister which was prepared by extracts from Mr. Sachin Chou-dhury's draft, the Counsel." the full text of which is in the Library of the House if anyone is interested in seeing it. Mr. Nehru returned to Delhi, not only with that statement prepared by Mr. Sachin DIWAN CHAMAN LALL (Punjab); Was Choudhury, extracts from which I shall this draft ever accepted by Mr. T. T. presently read to the House, but also with the Krishnamachari? written statements of Mr. Patel and Mr. Kamat. The Minister's reaction is worth no- ting. He did not like these draft statements. SHRI B. SHIVA RAO; The draft was not They were too long. Sir, he did not say either accepted by Mr. T. T. Krishnamachari on the then or at any time later that it was inaccurate. ground that it was too long and contained too His objection was that the draft statement as much about the discussions in Calcutta. prepared by Mr. Sachin Choudhury was too long and that it contained too much about DrwAN CHAMAN LALL: That is Calcutta. The Minister then said, not in writing. That is a verbal statement. 3949 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3950 ^On these considerations it MR. CHAIRMAN: He wants to know whether the statement that was loo long was a appeared to me (TTK) that the written statement or was merely an oral question of accommodation and the form in which it could be granted statement?. should be examined by the LIC, SHRI B. SHIVA RAO: It is in Mr. Nehru's Patel and Bhattacharyya. The evidence. results generally were communicat ed to me (TTK)______I (TTK) cer SHRI T. S. PATTABIRAMAN (Madras): tified that the arrangement discussed The original is still not there. was reasonable and might be finalised." SHRI B. SHIVA RAO: The original draft These are the extracts from Mr. Sachin statement is in the library. Choudhury's draft and even in the summary, as Mr. Nehru has pointed out in his evidence, SHRI T. S. PATTABIRAMAN: I would the two admissions to which I have drawn the very earnestly request Mr. Shiva Rao to go attention of the House were there. Then, what through the records carefully. Even Mr. B. K. happened? Mr. Krishnamachari went to Nehru has admi'ted that the original was not Bombay to give evidence, and he deviated in available and that only copies were available. his evidence even from his own summarised I am very sure about this, Sir. draft, while the poor officials who were to follow him in the witness box were labouring ' SHRI BHUPESH GUPTA: So many things under the impression that Mr. Krishnamachari disappear, Sir. would stick to the original statement, copies of which had been distributed to them and SHRI B. SHIVA RAO: These are the their own written statements had been taken extracts from the statement. away. Mr. Krishnamachari deviated from his own statement; and when he was confronted "There were nervous conditions in with the fact by Mr. B. K. Nehru on his return the money market and uneasiness to Delhi, Mr. Krishnamachari said, "I was in the business community. After advised to say as little as possible". Sir, ' the Budget of 1957, this position whoever gave that advice... deteriorated even more, increasing SHRI D. A. MIRZA (Madras): By whom the business community's uneasiness was he advised to say as little as possible? and apprehension. Some business men wished me (TTK) to further SHRI B. SHIVA RAO: I can go only by the strengthen this mood of confidence evidence as recorded. I have no further by some positive and early action to knowledge than is contained in the minutes of help the Calcutta Stock Exchange. evidence. I (TTK) was made aware that there were large bundles- oi Mundhra SHRI V. K. DHAGE (Bombay): The shares which were a serious drag on lawyers would have advised him. the market...... In view of the dis cussions I (TTK) had in Calcutta on SHRI B. SHIVA RAO: Whoever gave that the subject of Mundhra's shares and advice, gave him wrong advice and a in pursuance of my policy to give Minister, on oath to speak the whole truth, •assistance to and relieve the stock agrees to compromise with it and say as little market, I was agreeable to the LIC as possible. That explains the many occasions giving consideration to Mundhra's on which Mr Krishnamachari's memory faded proposals." whenever inconvenient questions were put to him. Sir, that is not the only Then, Sir, comes one of these two admissions to which Mr. Nehru has referred. 59 RSD—2. 3951 Life Insurance [ RAJYA SABHA ] Co-poration Inquiry 3952 [Shri B. Shiva Rao.] handicap placed in the than either of Mr. Bhattacharyya or of the way of these officers who were to follow Finance Minister. Mr. Krishnamachari in the witness box. Mr. Patel has given a full list of the difficulties he Sir, I do not know how much more time I had in preparing his defence. Files have. I would like to invite now the attention disappeared mysteriously when they would of the House to some of the pertinent have helped him materially to strengthen his observations made by the Commission in its own point of view. One file which contained a Report. The Commission said: Top Secret letter which was available to "We are satisfied that the facts Mr. Feroze Gandhi—a letter written by Mr. mentioned above, particularly those Krishnamachari to Mr. Patel—was missing and emerging from the evidence of Shri Nehru did not appear until after the Chagla Report and Shri A. K. Roy, clearly establish that had been submitted. There are several other Shri Patel had reasonable grounds for documents which were not made available to honestly believing that he had the Minister's Mr. Patel; copies of letters, demi-official and authority for the transaction. It is significant official, addressed to the Governor of the that at no time did the Minister even Reserve Bank by the President of the Calcutta suggest 'that I had, in the part which I took Stock Exchange in June 1957; the files of the in regard to the Mundhra deal (This is from Railway Board dealing with the request Mr. Patel's statement) gone beyond my during 1957 by Jessops for payment of authority.' " salestax; the telegram which was supposed to have been sent by Mr. Sodhani from Delhi And the Commission therefore came to the on the 13th June, a copy of which was conclusion—now I am quoting— that— made available to Mr. Feroze Gandhi; the statements of the police authorities in the "the Minister was aware of the course of the investigations; analysis of the antecedents of Shri Mundhra; Balance Sheets of Messrs. Jessops, Richardson and Cruddas and other firms made by the in the context of the knowledge that the Company Law Administration; diaries which Minister had and his doings, Shri Patel contained tlie appointments and engagements adequately apprised the Minister about the of the Governor of the Reserve Bank and of his transaction;- Personal Assistant for the year 1957. Sir, I am not discussing at this stage the question of Shri Patel, with good reason, honestly guilt or the measure of responsibility of the belived that the Minister approved of the various persons concerned in this. I am only deal being entered into; and pointing out that even a criminal is entitled to a fair trial and reasonable facilities for his the fact that the Minister's approval was defence. Why'should we not extend these faci- not reduced to writing was in keeping with lities to a civil servant of long standing? the 'informal' procedure that was followed between him and his Principal Finance Sir, Justice Chagla in spite of lack of Secretary." evidence on material points came to a These are the findings of the U.P.S.O. conclusion relying mainly on the law of probabilities, and . . . I will conclude with a reference to the action taken by the Government in its final [MR. DEPUTY CHAIRMAN in the Chair.] he Resolution on the findings of the U.P.S.C. It is said that he was inclined more to rely on Mr. well to remember that the Commission, at any Patel's version of the case rate, the six members of the Commission, men drawn from different walks of life, with considerable experience of 3953 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3954 administration and of public life, came to the Sir, I referred to the 'Crichel Down' case. conclusion that I have read out just now. It is There is one paragraph there to • which I not good enough, I suggest, either for the would like to invite the attention of the House. Government or for the officials concerned that The Home Secretary in announcing the action after two lengthy enquiries, first by the Chagla that the Government proposed to take in that Commission and then by the Bose Board, and case said: a very careful review of the Report of the latter by the Union Public Service "The two requirements of natural justice Commission, the Government should come to that have gone back to the beginning of the conclusion that the charges may be civilisation are that a person who may be dropped in view of Mr. Patel's past service. punished should know what the complaint Sir, I submit that the Resolution should have is against him and that he should be given been a positive one; it should have accepted an opportunity to meet it. That is the basis the conclusions of the U.P.S.C, without any of the rule of law throughout the ages. No reservations; or if it felt that there was any one, I am sure, would deny it to civil flaw in the reasoning of the Commission or servants." any defect in the conclusions to which the Commission came, it was the duty of the I only ask that the same consideration be Government to put into the Resolution the extended to'civil servants in this country for precise reasons which led it to come to a the sake of the morale of the Services and different point of view. The Resolution merely efficiency of Administration. contents itself with saying that there is some force in Mr. Pillai's minute of dissent. Mr. MR. DEPUTY CHAIRMAN: Motion Pillai had charged Mr. Patel with defiance and moved: rocklessness. The Resolution should have stated frankly whether it accepted those "That the decisions of the Government of charges or rejected them. India on the findings of the recent inquiry into certain affairs of the Life Insurance Corporation as embodied in Government Resolution No. F 15158-HS, dated the 27th And, Sir, may I remind the House— it is May, 1959, be taken into consideration." with some reluctance that I do so—that before the Commission started studying the Bose SHRI T. S. PATTABIRAMAN: Sir, I move: Board's findings, before it began to apply its "That at the end of the Motion the mind to the various issues contained in the following be added, namely: — Report, the Home Minister in a speech in Madras had completely absolved Mr. Krishnamachari from all blame in the matter. I 'and having considered the same, this will offer no comment on that statement by the House records its approval of the said Home Minister but I will say this that the decisions concerning Shri H. M. Patel U.P.S.C, bearing those views of the Home and Shri G. R. Kamal*" Minister in mind, must have considered its Report not once but several times before MR. DEPUTY CHAIRMAN: The submitting it to the Government. After Motion and the amendment are before spending four months over the evidence and the House. _ the Report it came to the conclusion that Mr. Patel had not only not failed in his duty but it SHRI JASWANT SINGH (Rajasthan): Mr. was his business to act in the manner he did. Deputy Chairman, I have heard with great interest the speech of the first speaker and I have no 3955 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3956 [Shri Jaswant Singh.] hesitation in saying that, whether it was the Report of the Chagla on the whole, I totally agree with what Mr. Commission or the Vivian Bose Board Report Shiva Rao has stated while moving the or that of the Union Public Service motion. This case is a very complicated case Commission, without giving any reason they re- and, therefore, to do justice to the whole jected tlie thing that did not suit them. The subject, it will take a very long time. I Resolution only stresses the constitutional would, therefore, confine my remarks to only responsibility of the Minister. My submission in one aspect of the question. We have seen this regard would be that I will try to submit that the Government, from the very begin-ing, before the House, from the findings and from in regard to this affair, has not acted with an the Report of the Commission, as to how far the open mind. When the Ch rigl a Commission Minister has been respons:ble in this matter. I was appointed by the former Finance can fully appreciate the loyalty of the Prime Minister and as soon as the report went Minister and the Home Minister towards their against the Minister, we have seen how colleague in trouble, but where it is a question irritated and angry- the Prime Minister fell. of doing justice, it was desirable scrupulously to He even remarked that Parliament hr.d observe all the proprieties in the case. We have hustled the Government to appoint the seen how this question first arose. It arose from Commission. Then, Sir, when the Bose Board a simple Parliamentary question. We also know was appointed and when its report also went from our experience how the answers are given against the Minister, how angry the Prime to the various questions put by the hon. Minister felt, and he felt so badly that a man of Members in ' this House or in the othea* House. his stature did not hesitate to pass certain Similarly, this particular question was replied to remarks, which he had to withdraw, when the by the former Finance Minister and his reply legal luminaries of this country objected was evasive. Both the Bose Board and the and wrote a letter to the Prime Minister. Chagla Commission have made certain critical And, then, Mr. Shiva Rao has already referred remarks in regard to the former Finance to the remarks of the Home Minister, Minister in his dealings in regard to this even before ihe U.P.S.C, had submitted its particular case. All this had not been accepted report in regard to complete!; ?bs living the Finance Minister of hi iponsibility. We by the Government because it did not suit them, have thus soen that from the very start the and their loyalty towards their colleague also Government acted with mental reservation. prevented them from doing justice to other Therefore, as was expected from the very people. Now, I would like to submit that from start, the Resolution has rejected the the very beginning the Life Insurance findings in the Chagla Commission Report Corporation Act and the assumption of office as and the Vivian Bose Report nnd they have not Finance Minister by Mr. Krishnamachari, more given any reasons. Similarly, the Resolution, or less, coincided and from the very start Mr. has not stated at all as' to what the motive to Krishnamachari developed a different anproach help Mr. Mundhra was. Also, as was stated by from the one which Mr. Deshmukh had. Sir, Mr. Shiva Rao, they have not also totally here I would like to quote what the Bose Board accepted the recommendation of the U.P.S.C, on this particular issue said. The Bose Board as far as the main civil servant Mr. Patel, was has said from the very staTt how Mr. concerned. It was not incumbent on the Krishnamachari started on this point so far as Government to accept the Union Public the L.I.C, was concerned. Here the Report says, Service Commission's Report, because there on page 27: "Mr. Krishnamachari, when haye been other occasions where such things have happened. But still in this particular respect wherever it did not suit them, 3957 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3958 he took over, had not the slightest intention which democracy we are imitating and of carrying out the direction of the Act or of copying, they protect their officers, and here a honouring Mr. C. D. Deshmukh's assurances senior Minister, to save his own skin, would in Parliament". Again, at another place, the not tell the truth, would not take the Report says that the other restrictions on the responsibility on himself but would like his power of Government to handle -these funds civil servants to do it for him. Here he as they pleased for purposes of investment definitely says that he would not mind if Mr. were just as many tnorns in the flesh of Mr. Vaidyanathan gambles away, but he will not Krishnamachari and two of the officers. So, it accept the advice of the Law Ministry. Mr. is so clear how, from the very start, Mr. Vaidyanathan has gambled away, and if Mr. Krishnamachari took an independent line as Krishnamachari was a responsible man, he far as the investment of the funds of the should have taken full responsibility for what L.I.C, was concerned. Then, Sir, it is also on has happened. record that he took personal interest in the affairs of the L.I.C, and on several occasions Then, Sir, I would submit that Mr. gave personal directions even in regard to Krishnamachari was fully acquainted with the advancing loans, etc. This is also stated on antecedents of Mr. Mundhra, and my next pages 30—33 of the Bose Board Report. attempt will be to show that he had a full part Therefore, in the circumstances it cannot for in this Mundhra deal. Then I would like to a moment be possible that he would play a show that the Bose Report on page 38 has passive part in regard to L.I.C, and the stated that when Mr. Krishnamachari was the Mundhra deal. Industry and Commerce Minister, he wrote to Mr. C. D. Deshmukh, the then Finance Sir, in this connection I would again Minister, on the 23rd August 1955 in regard to submit that the Law Ministry put up a Mr. Mundhra. All these ihings are to be noted certain proposal about the Investment Board to see whether he was ignorant of Mr. of the L.I.C. The case was put up to the Mundhra. Here Mr. Krishnamachari as Minister, and I particularly want the House Industry and Commerce Minister wrote to the to note what Mr. Krishnamachari wrote in then Finance Minister, Mr. C. D. Deshmukh, regard to this submission of the Law on the 23rd August 1955 as follows; "It seems Ministry. Here on this note in regard to the very strange that despite so many stringent Investment Board Mr. Krishnamachari measures in the Companies Act, right at our writes. Mr. Heernandani was the officer very nose H. D. Mundhra can do what he concerned in the Law Ministry and he put likes." He has been under the nose of Mr. up a certain proposal in regard to the Krishnamachari himself and can do anything. Investment Board, and this is what the "I do think that we must have some reserve former Finance Minister, Mr. Krishna- powers for Government at least to secure machari, writes on it: "Mr. Heernandani is a information and to prevent mischief when a poor specimen of a lawyer. I would prefer to large block of shares of any company whose leave things as they are and let Mr. Vaidya- capital and assets are more than Rs. 20 lakhs nathan gamble away than accept his are to change hands." advice." Mr. Vaidyanathan has gambled away. The responsibility has not been taken Then again, on the 17th February 1956 the by Mr. Krishnamachari. He shifted the Governor of the Reserve Bank wrote a letter responsibility on to others. A little while to the Principal Finance Secretary, Mr. Patel, ago, a very illuminating case was put before which was shown to Mr. Krishnamachari, the the House by the previous speaker, Mr. then Commerce and Industry Minister, Shiva Rao, as to how in Great Britain, giving information of Mr. 3959 Life insurance [ RAJYA SABHA ] Corporation Inquiry 3960 Lbhri Jaswant Singh.] being issued from this end. Please phone." Mundhra's activities. These are worth noting. Thus it would be seen that it was an Here what does this letter of the Governor of unbusinesslike and bad deal entered into by the Reserve Bank which was shown to Mr. the Corporation to j purchase certain Krishnamachari say? It says: "Mr, Mundhra's shares in six con-! cerns of Mr. Mundhra. activities in the recent past particularly in so What was the ' result? The result was that far as they concern breaches of foreign the Corporation lost Rs. 10 lakhs in this deal, exchange regulations and his rapid acquisition and consequently Mr. Mundhra gained Rs. 10 of controlling interest in large industrial con- lakhs. Then, Sir, Rs. 50 lakhs of the L.I.C, cerns", etc. On the 7th May 1956 Mr. money were locked in Mr. Mundhra's Mazumdar, Director of Company Law concerns which were , not likely to pay any Administration, showed this letter of the dividends. Then, in three cases Mr. Mundhra Governor of the Reserve Bank to Mr. was paid more than he had actually asked for, Krishnamachari, and on that Mr. and in some cases higher rates were also given Krishnamachari noted: "No further action on than what he had expected, and there was an this is needed at present, but we should agreement with the L.I.C, and Mr. Mundhra under which the L.I.C, was to purchase continue to watch the activities of Mr. - Mundhra." further shares worth Rs. l 25 crores, which shares were not in existence. This is in the Chagla Report on page 11. Then, Sir, as long ago as 23rd April 1956 Mr. Deshmukh, the then Finance Minister, had noted adversely against Mr. All these things couid not possibly have Mundhra and had stated that we should been done just to oblige Mr. Mundhra. never go in for any investments in Mundhra There must have been at least some motive concerns. This is on page 41 of the Bose for this extraordinary help extended to Mr. Report. Sir, it will now be seen that Mr. Mundhra to get him out of his serious Mundhra was in constant touch with Mr. financial trouble. As far as the officers Krishnamachari and was discussing Life are Insurance Corporation investments with his concerned, I read very carefully the Chagla concerns. On various dates Mr. Sodhani Report and the Bose Board Report. I have and Mr. Mundhra saw Mr. not anywhere seen any motive of corruption Krishnamachari. They saw him on 23rd or otherwise September, 1956. These are in the report of illicit financial gain made from Mr. Mundhra the Board. Then between 27th April and 7th by these officers. As far as the Union Public May, Mr. Mundhra had discussed the position Service Commission is concerned, they of of the Corporation's affairs as a whole with course have exonerated, and quite rightly Mr. Krishnamachari when the Chairman of too, but as far as their report is concerned the State Bank of India was also present. no Similarly. Mr. Mundhra has seen the Finance ; motive has been attributed . . . Minister on the 18th June at Calcutta and on the 23rd June at Bombay at the Reserve MR. DEPUTY CHAIRMAN: Are you Bank. Mr. Sodhani, Mr. Mundhra's putting up only one speaker? agent in Delhi, seemed to have seen Mr. Krishnamachari on the 13th June, and he SHRI JASWANT SINGH: More, if there sent the following telegram to Mr. Mundhra in is time. Otherwise I am the only speaker. Bombay. In this telegram it was stated: How much time is left, Sir? "Life Insurance Corporation prepared to purchase Jessops and B.I.C. Ordinaries at MR. DEPUTY CHAIRMAN: Twenty negotiated prices. Necessary instructions minutes.

SHRI JASWANT SINGH: I will try-to finish soon. 3961 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3962 Now, this Bose Board naturally, when so intend to say that this is not wrong, well, that much profit was given to Mr. Mundhra, tried is a different matter. I am just quoting what to search lor the motive as to why all this the report says. Mr. Morarji and Mr. Shah generosity was heing shown by the had a long discussion with him and they Government to this great man, Mr. H. D. prevailed upon him to keep the concern Mundhra, because nobody will do going. He was incurring a loss of Rs. 25 anything, much less our Government, to lakhs a year and he had to be rewarded for help any particular business man. Therefore that loss. This is what the report says. I am certainly there must be motives when crores quoting from the report. and crores of rupees are indiscriminately Then, Sir, all these things were fully known being thrown in this manner and the Bose to the former Finance Minister. Where could Board after sifting all the evidence, have come he give this help from? He was controlling the to the conclusion that as far as they are con- L.I.C, from the very beginning he took charge cerned, two motives appear to be clear to of the office of Finance Minister. He was them. What were the motives? The first completely controlling the Life Insurance was that this assistance was to be a quid pro Corporation and naturally, the policy of Mr. quo for the donations given by Mr. Mundhra Deshmukh did not suit him and he did not to the Congress Party funds and an attempt follow it from the very start. Therefore he had to • fulfill the promises made to him naturally to turn to the obliging milch cow about the Kanpur Mills. The report says that under his control and that obliging milch cow Mr. Mundhra very generously and very was the Life Insurance Corporation. In this kindly came to the help of the Congress connection, I would respectfully submit that it which was col. lapsing, by giving Rs. 1J lakhs is difficult for me to understand how the civil to the U.P. Congress and Rs. 1 lakh to the servants can be involved in an assurance Central Congress Party. Also when the given on behalf of a political party by the workers of the Kanpur Cotton Mills were Minister in return for the subscription to party going, to strike, Mr. Morarji Desai and Mr. funds or for having obliged them politically. Manubhai Shah had long conversations with Particularly in regard to the case of Mr. Patel, him both at the house and office of Mr. he has put in 35 years of meritorious service Manubhai Shah and prevailed upon him that and he is one of the most brilliant I.C.S, men the concern should be kept going, that amongst the Indian and British officers that elections were coming and they may have an ever took charge of affairs in our country and adverse effect on the Party. Mr. Mundhra was if it is accepted that they should involve him incurring a loss of Rs. 25 lakhs a year. He as Principal Finance Secretary in the political obliged the Congress, Mr. Morarji Desai and affairs of the Congress Party also, well, then Mr. Manubhai Shah. Assistance was pro- no credit is given to his long, long and mised. Therefore the Commission came valuable services which he has rendered to to the conclusion that this quid pro quo was this country. for the "monetary help which Mr. Mundhra Mr. Mundhra is well-known to me. I have gave to the Congress Party to the extent of Rs. seen him from his childhood. He comes from 2£ lakhs and for political obligations, for not my' town. I know his whole family. His allowing the mill to close. family is very religious. If a needy person goes to him for seeking help, I can assure SHRI P. D. HIMATSINGKA (West you, Sir, he would not give even Rs. 5. But if Bengal): It may happen in any other mill anybody is in authority and if he has to get when they try to run it. some work from him, well, Mr. Mundhra will pay crores of rupees. I know his habits. SHRI JASWANT SINGH: I am just quoting what is in the report. If you 3963 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3964

SHHI B. K. P. SINHA (Bihar): Is it from that man simply cannot help. Mr Mundhra has your personal experience as Minister in a peculiar, wonderful and an extraordinary Rajasthan? charm and he tried the same game with Mr. Deshmukh, and I can definitely say witk SHRI JASWANT SINGH: It is not my authority ... personal experience, because I do not belong to any Party. If I belonged to the Congress SHRI AMOLAKH CHAND (Uttar Party, that would have been possible. Pradesh): When you say it with definite authority, is it from your personal experience Now, Sir, what happened? Mr. also? Mundhra naturally would not give anything merely for the sake of giving. SHRI JASWANT SINGH: What personal He wanted help and he did get /ery experience? I could not know because I have good help. He was in serious financial never been . . . difficulties. The Board asked him as to why he did this and he admitted— it is on record—that it was the pro MR. DEPUTY CHAIRMAN: It is time. mise for such an assistance; in regard to the Kanpur Cotton Mills, he was SHRI JASWANT SINGH: My friend's having a loss. The Government asked interruption I have not, followed; therefore I him to allow it to run. He was incur need not reply to him. But what I wanted to ring a loss and therefore, financial say was this, that he tried the game which he help was promised to him. This is tried with Mr. Krishnamachari, with Mr. clearly stated in his evidence before Deshmukh also, and with great difficulty Mr. the Board. Again, when the Board Deshmukh agreed to see him. And within the asked him about the funds, he said two minutes that he had with Mr. Mundhra, that he had faith in the Congress. I do Mr. Deshmukh came to know of him, because not know since when he developed his Mr. Deshmukh was a man who had foresight; faith in the Congress. I can definitely he knew what man he was talking to, and say without any fear of contradiction, asked him to get out of'his room within two if the Congress has been following the minutes, and in spite of the pressure brought directions and programmes set out be on him a number of times to give an interview fore it by Mahatma Gandhi, he has to Mr. Mundhra, Mr. Deshmukh completely faith in what the Congress does not refused, and he had written a note that no have faith, and therefore his statement investment of any kind is ever to be made in in regard to his faith in the Congress the concerns of Mr. Mundhra. Therefore, Sir, programme cannot be believed by all this goes to show that right from the anybody who knows him personally, beginning till the end Mr. Krishnamachari was particularly a man like me who has in the know of these things. He has taken the seen him since his childhood. He is a initiative from the very beginning; he was in financial wizard, I can say definitely, constant touch with Mr. Mundhra at every and if the Prime Minister makes him stage; he has been discussing with him L.I.C. the Finance Minister one day, I can affairs and L.I.C, deals and to save his skin he assure you that the difficulties in re wants to throw the responsibility for the deal on the officers, officers of the kind of Mr. gard to internal and external finance in respect of the future Five Year Patel who also, in his own way, is one of the Plans will disappear. He is a real best officers in the Indian Civil Service that genius and a wizard in financial the country had ever produced. It is my view matters and this is worth trying. that excepting Mr. Krishna-

Finally, I will submit that India will not produce a bigger Finance Minister than Mr. C. D. Deshmukh. If Mr. Mundhra" has a chance and if he gets into contact with any person and he -wants to get something done by him. 3965 Life Insurance [11 SEP. 1959 ] Corporation Inquiry 3966 machari nobody else is responsible for this Now, Sir, in the other House there was a bad deal and he must face the consequences. debate and no one has suggested that there were any mala fides or corruption • involved SHRI LAVJI LAKHAMSHI (Bombay): Mr. anywhere. Once we accept that position, Sir, Deputy Chairman, Sir, at the outset I find thes^the question arises with'regard to this myself in complete agreement with what Mr. particular deal as to what really we are Shiva Rao had expressed in the opening re- enquiring about. In these great volumes, the marks of his speech with regard to the mass of evidence that has been produced, once U.P.S.C. before the Commission and another time before the Board, we find that a lot of extrane- Sir, this L.I.C, deal with Mr. Mun-dhra has ous and irrelevant matters are also brought on been subjected to various discussions, enquiry record, were allowed to be brought on and scrutiny by very able people. Questions record—not that that matters very much— were asked with regard to this deal twice. A particularly one extraneous matter to which two-hour discussion took place in the Lok my hon. friend Mr. Jaswant Singh has Sabha. Thereafter the Chagla Commission referred, an extraneous and completely irrele- was appointed, thereafter the Bose Board, vant matter, and that is the payment of then the U.P.S.C, and ultimately came the contribution to Congress funds. Government Resolution, and now we are discussing this deal. SHRI JASWANT SINGH: Is it not so? I would like to . . . In the course of these various enquiries and discussions I believe millions of words have MR. DEPUTY CHAIRMAN: No been used. All these words have been used; interruptions please; let him go on. yet we find the remark and the opinion from the two inquiry bodies that so little hag been SHRI LAVJI LAKHAMSHI: I shall just said. One thinks, Sir, that language is a show how it is extraneous and how it is vehicle to convey thoughts. Here the language irrelevant, the matter on which the whole or the mastery over the language was utilised assistance theory is based—not that this to withhold facts, to withhold the conveyance particular question of donation or contribution of ideas or conveyance of truth. Nevertheless, to any party or to anyone cannot be discussed, Sir, one does find one fact clearly established, but whether it wa^ relevant to the particular namely that in this deal there was no question, enquiry at issue. There were three officers no allegation and no finding that any mala concerned against whom the enquiry was fides can be attached or attributed to any one being conducted. How was that relevant, concerned. contribution to a political party's funds? There was no evidence whatsoever to show that the SHRI AMOLAKH CHAND: Quite right. political party, meaning the responsible Ministers and responsible persons in position SHRI LAVJI LAKHAMSHI: None of the in the political party invested these L.I.C, commissions or enquiry bodies or the funds simply because funds were paid to the U.P.S.C, who are very independent persons, Congress Party. There was no allegation have come to the conclusion that there were whatsoever, no piece of evidence whatsoever. any mala fides; there was no corruption What I submit is this that, just as Mr. Jaswant whatever involved in this deal. If at all there Singh's attention was detracted from the real was anything, as the hon. the Home Minister matters at issue by bringing in this extraneous has suggested, there was at best or at worst an evidence or irrelevant piece of evidence on error of judgment. record, similarly, unnecessarily so many people waxed eloquent over it. , We can also wax elo- 3067 Life Insurance [ RAJYA SABHA j Corporation Inquiry 3968 [Shri Lavji Lakhamshi.] quent over tne invest large amounts in the shares of a donations to the various parties. Mr. Jaswant particular concern, then I fail to Singh, it appears, had a very personal see how really a different procedure experience oi Mr. Mundhra. than the one adopted in this case could be usefully adopted. Everybody knows; that SHRI JASWANT SINGH: Certainly. investment of a very large sumin the share market particularly from the L.I.C, is bound SHRI LAVJI LAKHAMSHI: I am sure as a to disturb the share market. If we go into the Minister he has had also a personal open market, maybe so many shares are not experience, as he said that persons in position available or maybe, on the con- trary, we can always extract money from him. will be handicapped because scrips (Interruptions.) are not available as much as we want. Suppose you want one lakh Then, when Mr. Jaswant Singh was no more shares worth crores of rupees; they a man in authority, I think he has also had the are not easily available in the market. experience that Mr. Mundhra pays no one Nobody is prepared to bargain with when he is not in a party. One can always wax i you. Therefore you get them in drib-! lets eloquent about other parties; about other and when you get in driblets, you ' are bound parties also one can say. But this is an to pay higher prices. It will be extraneous matter. I am not going to take up unbusinesslike if we adopt this j procedure. my time with regard to that. It has been clearly I would again say that I once we come to established, Sir,—again I am reiterating—that the conclusion that a very large amount, in the no mala fides or corruption is alleged against interest of the L.I.C., should be invested in anyone. the shares of public concerns in the private sector, once that decision was taken, the Then, Sir, the question arises as to what other follows logically that the procedure that really is the matter. The L.I.C, invested very was adopted was proper and that was by large amounts in the shares of the companies negotiation only, because the L.I.C, was in which Mr. Mundhra was the controlling purchasing shares almost of such party. dimensions ,' which gave, if not fully, almost the controlling interest in these SHRI JASWANT SINGH: It was also agreed various concerns. Therefore, I do not find to pay him another Rs. 1-25 crores in regard to anything wrong with the procedure. shares which did not exist.

SHRT LAVJI LAKHAMSHI: Now, Sir, the Regarding the prices I have my own question really falls into three parts. First of doubts although many other gentlemen, hon. all, who was responsible for the decision to Members of this House as well as of the invest moneys, such a large sum of money of other House, have expressed their opinions the L.I.C, in these Mundhra concerns? What to the contrary. Personally I feel that in procedure was adopted in investing this regard to the prices paid and particularly in money, and whether the price paid was proper view of the procedure followed when the or improper? These are the three parts. These decision had been taken, we cannot quarrel three main questions have been by-passed by with the prices because, my friend Mr. bringing in this extraneous or other extraneous Jaswant Singh suggested, already there is a matters. I shall first take up the last two points. loss of Rs. 10 lakhs. I say 'No'. Because we With regard to the price paid, much has been have not sold the shares yet. Loss has not said, particularly in the two-hour discussion in yet been sustained. . . the Lok Sabha. With regard to the procedure I must submit that once the decision has been taken to SHRI JASWANT SINGH: Higher prices have been paid by you and 1 so you will lose . . .

3969 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3970 SHHI LAVJ.1 LAKHAMSHI: Yes possibly, there but it is said that witnesses may lie. if you go to the market. If we unload all these Witnesses may not tell the whole truth but the big shares somebody will have to bear the loss circumstances do not tell a lie and I would at that time. I am, as a matter of fact, told that point out the circumstantial evidence to show if by negotiations we still today want to sell that Mr. Krishnamachari knew about this the shares, maybe there will be a profit. There thing and knowing Mr. Krishnamachari as we is going to be no loss because the concerns of do, for a man of his ability, of his vigour and which we have purchased the shares are very initiative, mere knowledge with him does not important concerns, concerns having huge count. He either sanctions or does not contracts from the Government. But that is sanction, particularly when he knows the apart. Therefore the question really is as to antecedents of Mr. Mundhra. who is responsible for taking this decision of firstly making very large-scale investments in DR. W. S. BARLINGAY: It is a surprising the shares of public concerns in the private conclusion from a lawyer. sector, and that too of this Mundhra. In tms case, I must submit that although Mr. T. T. SHRI LAV JI LAKHAMSHI: As a lawyer I Krishnamachari, the then Finance Minister, am coming to this conclusion. I am not quite denied all his knowledge about it, I find from in agreement with you. As a lawyer of some the evidence that he in fact knew and he and experience I might tell you that circumstantial he alone must be the person who sanctioned evidence is there on record to suggest it. the purchase or sanctioned the idea of Firstly, Mr Krishnamachari has published a entering into the share market for the statement very recently and in paragraph 11 purchase of the large amount of shares and of that he suggests that so far as the policy of that too from Mundhra. investment of L.I.C, was concerned, he was guided by one principle, namely, that the DR. W. S. BARLING AY (Bombay): What L.I.C, investments, if they are in Government is the evidence for this? Securities, need bring 'in only some returns but in other cases they must bring 5 per cent, SHRI LAV JI LAKHAMSHI: I am coming return and for that reason, he disallowed some to it. I am challenged here. In the papers it is of the proposals for investment in certain reported that the hon. Mr. Feroze Gandhi—to public sector concerns. As a matter of fact he whom goes the credit of bringing to light all put up more interest in the case of the I.F.C these facts which he has done in the public As a matter of fact, with a view to earning interest, not only this but also other things he that 5 per cent, return he directed that shares has brought out creditably—has also of Tatas and ACC must be purchased. While suggested the same thing that there is no making that statement he also thereby gives evidence whatsoever. I would say that when us to understand that he was very much on the he says that there is no evidence, what he scene and so far as L.I.C, investments were means is, no evidence other than oral concerned, he was directing the . investments evidence given by various persons, because in the purchase of shares in Tatas and ACC. the oral testimony has been given. The oral He was turning down the purchase or testimony is there of no less a person than Mr. investment in certain things, sanctioning some A. K. Roy, who, I understand on retirement, is and was not sanctioning others. Therefore he tipped to be the Auditor and Comptroller was not the person, if anything with his General of India. He has given oral evidence. knowledge in business, who would only say Mr. B. K. Nehru has given oral evidence. Mr. 'Look into if. Mr. Feroze Gandhi defended Patel has given oral evidence. Oral evidence this word 'look into it'. This was in is connection 3971 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3972 [Shri Lavji Lakhamshi.] credit goes to him but what I say is this that with the meeting at Bombay on the 22nd or Mr. Krishnamachari, not that he wanted to 23rd, I forget the date. It was brought to his disown even, got nervous at a certain stage. notice that Mundhra shares were being That is all that I say. Nothing else. It was a negotiated; He said 'Look into it'. Mr. question of nervousness. Very intelligent Krishnamachari with his vigour and initiative, psople sometimes get more nervy than his expressing this 'Look into it' should not be ordinary people. There is . another thing also. equivalent to the innocuous 'Look into it' used by the hon. Prime Minister in connection with [THE VICE-CHAIRMAN (SHRI DAHYABHAI V. General Thimmayya, as suggested by Mr. PATEL) in the Chair.] Feroze Gandhi. This 'Look into it' was a very THE VICE-CHAIRMAN (SHRI DAHYABHAI much formidable 'Look into it' with fore- V. PATEL) : Your time is up. knowledge about a thing and not a 'Look into it' of a mere casual remark. SHRI LAVJI LAKHAMSHI: Tw» minutes only, Sir. SHRI T. S. PATTABIRAMAN: You forget that so far as.... (Interruptions) evidence goes, PANDIT S. S. N. TANKHA (Uttar Pradesh): even Mr. Patel did not go as far as you say . . Let us have the evidence. . SHRI LAVJI LAKHAMSHI: Another SHRI LAVJI LAKHAMSHI: Mr. Patel may instance I can give and it is that Mr. Mundhra not have before the Chagla Commission . . on the 7th May 1957 records at the B.I.C. . Board of Directors' meeting that he met along with Mr. Bhattacharya the Chairman of the (Interruption.) State Bank, Mr. T. T. Krishnamachari and discussed with him the whole matter. And this I am not defending Mr. Patel. If you say that is something recorded on the 7th of May he is guilty, by all means sack him. I am not which is much prior to the deals that were defending Mr. Patel at all but when I see that entered into, very much prior to the the Minister—and I agree entirely with Mr. controversy that has come about. That cannot Shiva Rao—lets down his officers, whether be a lie. That he did meet him is a fact. This what he has done . . . shows, Sir, that the prior knowledge of Mr. T. T. Krishnamachari was there. It is also SHRI P. N. SAPRU (Uttar Pradesh): Mr. reported that Mr. B. K. Nehru prepared the Krishnamachari came first in the witness box. long statement and that statement was shortened and it was said that there was the DIWAN CHAMAN LALL: What about the approval for this deal by the Finance Minister. officers letting down the Minister? PANDIT S. S. N. TANKHA: The prior SHRI LAVJI LAKHAMSHI: Quite right. knowledge was that Mr. Mundhra was not Then punish them. I am also partisan for none. reliable. From wfiat evidence I have been able to recall I speak. I may tell you that I am a great SHRI LAVJI LAKHAMSHI: Pardon me, I admirer of Mr. T. T. Krishnamachari. He is a am talking of a record made on the 7th of great economist, he has done great service. As May 1957, prior to the Mundhra deal. a matter of fact he has taken our budgets out- Bide the normal grooves and he has brought And here, Mr. Patel who had advised Mr. nearer the establishment of the socialistic C. D. Deshmukh against any Mundhra shares pattern of society. All or.... (Time bell 3973 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3974 rings.) I will finish in a minute, Sir. Mr. Patel he would not give out anything. There is had advised Mr. C. D. Deshmukh that he was something very wrong. Really he has not a reliable man, because he was likely to sanctioned it as a policy and said "you may artificially-put up all these things in the share deal with Mundhra. You may look into it". market, and as such we should not deal with But then what is the procedure? There is no such a man; how could he suddenly change other procedure you can adopt in the stdck his opinion of the man? There is no charge of exchange. The stock exchange is such a malo fides against Mr. Patel and the Report delicate matter and it is so sensitive that also says there is no charge of mala fides. But whenever you make big purchases, there are then, why did this man all of a sudden change bound to be ups and downs. So no other his opinion? Sir, the answer or the key to this procedure could be adopted except that of question lies in the statement of Mr. Krishna- negotiations and in the case of negotiations machari himself. Mr. Krishnamachari is of the there is likelihood of a little discrepancy of strong opinion that persons do not matter. He prices here and there, if you agree that there is says, "I am not buying Mundhra. I am buying no mala fide. Ask any individual person. Ask the shares of Mundhra. Mundhra may be a Mr. Himat-singka. Ask Mr. Babubhai Chinai. bad man, but if the shares are good there is They will tell you that if they invest money in nothing wrong in buying them, in a good large sums, there is likelihood of a little loss company, even though they may belong to here and there. So I do not find fault with the Mundhra." So the very first principle that we prices. Personally I think Mr. Krishnamachari should not deal with Mundhra is given the go- felt that the prices had been paid which were by by no less a person than Mir. T. T. rather very bad. He agreed with Mr. Feroze Krishnamachari. It was not Mr. Patel who did Gandhi's suggestion. Therefore, he became it. nervous. And today this is the result of his disowning this. What happened0 These voluminous reports have come. If he had DrwAN CHAMAN LALL: That is all stated in Parliament that day and frankly right. admitted and said, "I am of this opinion. I disagree. Mundhra I can deal with. This SHRI LAVJ.I LAKHAMSHI: If that is right, investment, had taken place and I decided the then it follows immediately as a corollary of it price-part of it". That would have been all that Mr. Krishnamachari knew about it and he right and such big enquiries would not have was very much responsible for the deals and for taken place. the prices. Mr. Krishnamachari on the 4th September, to a question^ whether the moneys DR. A. N. BOSE (West Bengal): Mr. Vice- of the LIC were invested in private enterprises, Chairman, about a year and few months back, replied, "No". Certainly they were invested, but when the purchases of the Life Insurance a technical reply was given. Again on the 29th Corporation were exposed in Parliament and November an unsatisfactory and evasive reply when the deals ' were immediately referred to was given to another question. And then there an examination by a judicial commission, were the discussions and the final statement high hopes were raised that the new-born where Mr. Feroze Gandhi brought out all the State had taken a great stride towards building facts about the prices, that the prices were paid up democracy. It was a courageous step for a on a Sunday and that in some of the cases " the Minister to have referred for public exa- prices paid were higher than asked for etc.; mination a deal in which his own reputation these made him nervous. So was seriously involved. But these early hopes received a rude 3975 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3976 [Dr. A. N. Bose.] in turn, blames each of the others. All these shock when immediately alter the gentlemen and a Governor of the Reserve Report of the Commission which Bank, as well as the Chairman of the State gravely compromised the position of Bank of India give differing and . mutually the Minister, the Prime Minister came contradictory versions of the same incident. forward in defence of his colleague Men of standing in the business world give and gave him a good conduct certifi us childish explanations to cover up cate. Thereafter, the part of the something of which they are either officers in this business was referred frightened or ashamed. We have not been for investigation to another board of told the whole truth". enquiry. After this board had report ed, the matter went up to the Public Service Commission and last of all, This was what the Prime Minister regretted to the Government for its final dis immediately after the Chagla Commission had posal. As a result of all this, ulti presented its report and that stands true even mately all the accused have been to this day, after the recommendations of the exonerated. Shady transactions had Public Service Commission and the been revealed. It has been established Resolution of the Government. At the same that public money had been wasted, time, Sir, there was no doubt about the fact hut none have been found guilty. All that shady deals had been made, that there was have acted in good faith. The prover impropriety in the transactions and that there bial mountain in labour has brought had been loss of public funds. "No one forth a mouse. Sir, the people feel pretends," as the Bose Board Report goes to bewildered. Expectations were say, "that it was a proper business transaction roused among the people that neither the for even the defendants say that if high level Minister, nor the highest officers of the State, policies and Government directives had not whatever power or position they might hold, been involved, they would not have entered cannot escape the arms of democratic justice. into it or, at any rate, they would not have These hopes have been dashed into pieces. done so, if they had known the facts that have Sir, of all the literature on this sordid business now emerged." So, Sir, there is no doubt about which has been circulated amongst us, only the dubious transactions, the shady deals and the enquiry of the Bose Board gives us a the loss of public money. The question is thorough and exhaustive picture of the whole about the fixing of the responsibility and that business. The Board had to work under great is a far more difficult task because every handicaps. Nobody was in a.mood to tell the important actor of this drama is trying to shift truth. As the Report says: the blame on to others. The Chairman says that he was acting under the directions of the "We found some of the highest officials Finance Secretary; the Finance Secretary says of the land shirking responsibility and that he was acting under the orders of the hiding the truth. We found each trying to Minister and so on it goes. Hence, the Bose wash his hand of a matter that has evoked Board had to go into the whole matter. They much public criticism and each trying to could not possibly confine themselves strictly throw the blame on the other. The Minister to the officers. The very case shows that that blames the Principal Finance Secretary and was impossible because if you want to go into the Secretary blames the Minister and a the case of the Finance Secretary, the Minister colleague who holds a high office; the is dragged in; the Finance Secretary is colleague shifts the onus to a co-worker, the Managing Director of a large national institution in which both hold high and responsible office and the Managing Director, 3977 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3978 proved innocent, if he acts under the orders of second transaction was in June, 1957. when the Minister and so, the Minister has to be shares from six Mundhra concerns were dragged in. Sir, the Union Public Service purchased in desperate hurry, offering much Commission and the Government have higher prices than even Mundhra himself had regretted that the Bose Board went outside the asked for, the margin being Rs. 66,250. Then, terms of reference and they have cast some in September, 1957, further shares were reflections also in that the Board has brought purchased from Jessops and Richardson & in motives. Sir, that is . too legalistic a view of Cruddas, when Mr. Kamat was the Chairman, this thing. Any board of enquiry must go into under the instructions from the Finance Secre- the whole business, must enquire into the how tary. Now, the question is this: How were and why of the case and must probe into the those purchases made? Under what terms were motives because it is the motives that throw they made, under what authority and, who light on the actions. If it was wrong on the part were responsible for those purchases? Sir, the of the Board to have gone into the motives or Life Insurance Corporation Act provides, in to have gone outside the terms of reference, the section 19(2), for an Investment Committee Union Public Service Commission and the with four experts included in it to see that the Government too have committed the same investments are made according to sound mistake in that they have brought in the business principles. According to the Act, the Minister. What business did the Government Corporation is an autonomous body. Section Resolution have with the conduct of the 21 of the Act entitles the Central Government Minister? What did it have to do with his only to give broad directions of policy as conduct? Why do they bring this in paragraph regards investments, not the right to select the ten, absolving him of all responsibility? He investments but to give broad directions of was not within the terms of reference. Why did policy and even that must be communicated in they go into the motives of the Finance writing, not verbally. Now, what was done? Secretary? Why did the Public Service Government exceeded the limits of the Act. Commission and the Government Resolution They went into the minutest details of every say that there was no mala fide on the part of investment and did not give any directive in the Finance Secretary, that there was no writing. The Investment Committee and the personal gain? I say, Sir, that motives have to Executive Committee of the Corporation were be enquired into and there cannot be strict shunted aside; they were deprived of their hide-bound and limited terms of reference functions; their functions were usurped by the confining an enquiry only to the conduct of the Chairman and the Managing Director and from officers. On the whole, Sir, in spite of the hard them by the Finance Secretary himself. The language used, in spite of the occasional Finance Minister says that he did not know digression from the main thing, it is the Bose that the Investment Committee was by-passed; Report which gives us a consistent and a the Finance Secretary says that he knew it convincing account of the whole story. perfectly well and the Secretary j acted under the orders of the Minister. The Secretary says Now, Sir, to come to the story. In April, that the I policy was decided at a high level 1 1957, when the Finance Secretary was and that this new policy was initiated by the Chairman of the Corporation, he purchased Minister himself. The Minister, reversing the fifty thousand shares of Jessops without the policy of his predecessor, Mr. C. D. advice of the Investment Committee, not Deshmukh, decided to control the funds of the through brokers but directly and at a higher Life Insurance Corporation and so it was .price than the market rate. The 3979 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3980 [Dr. A. N. Bose.] decided at a high level "This is very much like 'The House that that the funds would be administered by the Jack built.' Mr. Kamat ; relies on Mr. Patel Government, not by the Corporation, not by and does not think any verification is the Executive Committee or the Investment necessary because Mr. Patel is 'in a very Committee, as provided in the Act. important position'; Mr. Patel relies on Mr. Now, what is there to justify this action? To Chaturvedi because he holds a responsible • justify this shady deal, to justify the position as Chairman of the Calcutta Stock purchase of spurious shares, a fiction had to Exchange; and Mr. Chaturvedi appears to rely be created and the fiction was a crisis in the on Mr. Mundhra who was his close personal Calcutta Stock Exchange. There was nothing friend. So the whole edifice is built, brick by in the press to suggest that there was anything brick, on Mr. Mundhra's unverified assertion serious there. Even the Minister himself could that he is in trouble with his brokers." not agree that there was a crisis in the market and even the Governor of the Reserve Bank does not testify to it. That is how this fiction stands. Here comes the question of motive. Why was this transaction made? Sir, who has benefited by this PANDIT S. S. N. TANKHA: The hon. transaction? Obviously, it is only one man, Minister has stated that there was a crisis. Mr. Mundhra. And incidentally it happens that this gentleman had obliged the party in power by stopping the closure of the Kanpur Cotton DR. A. N. BOSE: But how they came to the Mills, stop-ing the closure at a huge personal conclusion is given here on page 81 of the loss of Rs. 25 lakhs a year and this also stands Bose Report: uncontradicted that he made a donation of Rs. 2£ lakhs in two instalments to the party in power. I doubt whether any friend opposite "The whole fabric is built up on a casual will claim that Mr. Mundhra was a statement of Mr. Chaturvedi in Calcutta philanthropist, that he was a disinterested which in turn is based on Mr. Mundhra's person completely devoted to public good unverified statements;". without caring for his own profit, I doubt whether any of my friends opposite will make that claim. Then why did he make these SHRI J. S. BISHT (Uttar Pradesh): What offers? Why did he incur this heavy loss? It page is it? just fits in with the story that all these financial experts made a deal which led to a huge loss of public money to repay his DR. A. N. BOSE: Page 81. And it says generosity. And nobody denies either part of here: the story. How do they fit in? How do you account for these without connecting these two incidents? Sir, on this I shall again quote "-----and to all that is added a from the Bose Report. On page 59 it is stated: .high policy directive given in this off-hand manner. It is significant that not a single broker has been called to say that he was "First, Mundhra shares were totally about to sell or was threatening to sell. The banned;". whole fabric rests on Mr. Mundhra's unverified asset, That was when Shri C. D. Deshmukh was the Finance Minister. And then on page 84 it is said: 3981 Life Insurance [ 11 SEP. 1959 J Corporation Inquiry 3982 next Jessops were purchased; and then, like Messrs Kamat and Vaidyanathan in in this telegram, Jessops and B.I.C.; and by very strong language, nothing the ti'me we come to the 24th of June, it is prevented him from putting something on almost anything that Mr. Mundhra can record to show that he disagreed and reasonably offer to bring the figure up to a g.avely disapproved of these deals. crore and a quarter of rupees." The Bose Report finds the Finance Secretary guilty of all the charges, finds .him guilty of abuse of authority, interference in the autonomy of the Corporation, The Finance Minister denies that he issued influencing the Chairman of the any instruction to his Secretary. All that he Corporation, negligence in fixing the prices admits to have said is that the matter may be of the I shares, impropriety of the looked into and that he had also urged caution. transactions , and causing loss to the Sir, there are two grave objections against the Corporation By implication the Finance plea of ignorance given by the Finance Minister I is also indicated although his Minister. First of all, his answer to the part i was not open, although he did not 1 question in Parliament where he categorically openly and formally commit himself. 1 It is stated that the investment was worthwhile and clear from the Report that he [ could not that if the Stock Exchange was relieved, that absolve himself of the responsibility. was only incidental. He tells before Parliament that this was a good business transaction, a financially sound transaction, and later on in this apologia he comes forward Then comes the Report of the Public Service .with the plea that the Minister could not Commission. It completely upsets the apple possibly go into the matter when he has to cart. Its flnd- answer about a hundred questions a week. Sir, ing is that the Finance Secretary and the it is strange that such a serious matter could Chairman of the Corporation acted rightly not be looked into by a Minister like him and in the purchases of June, that these that Parliament could be hoodwinked with a purchases were the best under the draft prepared by his Secretary. The Bose circumstances, that Report rightly says on page 150 that the I there was a real threat to the Stock market of Finance Minister seeks to avoid disclosure of Calcutta and that if Mr. Mundhra was the facts in Parliament. relieved that was only incidental. The Commission further finds that the Secretary acted under the orders of the Minister and it further goes on to record that the Finance The second objection against his plea is Secretary has to implement the policy of that he took no step against his Secretary after the Government, that he has nothing to do the deals came to light, after he was in with the provisions of the Act, nothing to possession of facts. Again here in this do with the strictures of Parliament, that he apologia his argument is that repudiation is is entirely bound by the orders of the not a normal administrative process and -that Minister, that he did nothing improper, that it has to go through a long chain of procedure. the transactions were not against sound Sir, there are ways of reprimanding an officer business principles and that he had the without going into this long chain of formal orders of procedure. He could have written a note of the Minister who was aware of everything censure somewhere in the files. When he from beginning to end, who could do the same thing against officers was aware of the antecedents and the bad 59 R. S. D.—3 reputation of the person he was dealing with and who was also aware of the prices that were being offered for the shares. The only fault found in the Union Public 3983 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3984 IDr. A. N. Bose.] Service Commission's should enter into these dubious deals or allow Report is regarding the price in June, that his Secretary to enter into these deals, those prices were not fixed with care and knowing fully well the man he was dealing caution, for which the Chairman is censured. with and the companies which this man was Thus, the findings of two eminent controlling? This also leads to the only Judges, who examined a large number . of suggestion, the suggestion of assistance witnesses, who went into a mass of data theory. Nobody has denied that this man and evidence, were set aside in this short made a contribution of Rs. 2i lakhs to the summary report. The whole thing was upset. Congress Party. Nobody lias denied that the But the strangest part of the whole series is stopping of closure of the Cawnpore Cotton the Resolution of the Government. This Mills inflicted a loss of Rs. 25 lakhs on hirn. Government Resolution comes as a fitting Tlie only thing that has been pleaded from the climax to this fantastic and sordid story. It other side is that other parties also are says that the transactions were against receiving donations. It is just like this. When business principles and against propriety. you accused somebody of theft, the thief said But who did ij? Who did the transaction that the others were also stealing. And then, which was against business principles and what gifts are the other parties receiving from against propriety? Certainly not the businessmen, I do not know. And I have Minister. The Minister had his certificate never heard of any, gift received from any from the Prime Minister at the very beginning. quarter, from any businessmen by any politi- And then the Government Resolution has to cal party besides the Congress, of any amount counteract the comments of the Union Public rising up to six figures . . . Service Commission against the Minister. Unfortunately, to absolve the SHRI B. K. P. SINHA: It is only from Minister is to indict the Secretary, and foreign countries that disinterested aid to absolve the Secretary is to indict the comes. Minister. But here the Government Resolution performs the astounding trick DR. A. N. BOSE: I am not speaking about of reconciling, these enigmas and foreign countries. That you can discuss absolving both. The Minister was not at all with the other friends, i concerned with the business and the THE VICECHAIRMAN (SHRI Secretary acted in good faith—not for DAHYABHAI V. PATEL) : Please wind personal gain. So, we come to this that there up. is the guilt, but nobody is guilty. A grave offence has been committed, but nobody is the offender. To the ordinary lay DR. A. N. BOSE: Yes, Sir, I am not so public al] that comes out of all this is that much concerned with the actual fixation of oral instructions and hints were given by the guilt for its own sake. If fixation of guilt is necessary, it is only to avoid repetition, to Finance Minister to his Secretary. He did not commit anything to writing, but hints and deter the com-rnitment of such deeds in future. Unfortunately that purpose has not instructions were given. The Secretary was been served. There are issues which are even wanted to execute the policy which Was more important than the fixing and the finding communicated and he was allowed to of the guilt. The whole business raises issues improvise any means he likes to implement of great constitutional and. administrative that policy. Then, the question that significance. First of all, the appointment of will come from the common man is: the Finance Secretary as Chairman of the Life Why did the Finance Minister, who is known Insurance Corporation puts the man, however as an efficient man, a man with personality, loyal and conscientious he might be. a man with a sound knowledge of finance, 3985 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3986 into a dilemma as to whether he should I think they had to make a reference I under serve the Government or should serve the relevant article of the Cons-' titution in the Corporation. When the interests regard to this matte-.- I think it is right, wise conflict, should he be loyal to Government and proper that Government should attach the or should he be dutiful to the Corporation? highest importance to the views in regard to And then, another point raised is whether service matters of the Union Public Service the Act is to be honestly and scrupulously Commission. It is the constitutional adviser of observed by the Minister or whether the the Government in these matters, and I am Ministry can circumvent the Act, which was glad that Government has adhered to the con- obviously done in this case, and, when it is vention of going by the recommenda-of the done, whether the Parliament should be hood- Public Service Commission in this matter. I winked or taken into trust. It appears think, Sir, this convention is essential in the occasionally as if the Question Hour in interests of preserving the morale of the public Parliament is a battle of wits, as if the services. I do not say, Sir, that we should interrogators are out to extract the pamper our public services, but we should maximum information from the Minister show to them that we mean to be fair to them and the Minister is out to hide, to and that they can rely upon our support if they withhold as much information as possible, discharge their duties in an efficient and particularly when the prestige and the interest honest manner. of his department are concerned. I think these questions are very ominous to the future of Now, Sir, having said that, the Public democracy. If the Minister answers Service Commission has to be consulted in question with suppre-ssio veri and regard to all disciplinary matt; rs, I would suggestio falsi and if ( the solemn assurances like to say that I have a very high regard for given in Parliament by a predecessor can Mr. Justice Bose. I think he is one of our be set aside by another Minister of the same great jurist, and he is a man of sturdy Government, and if the strictures laid down in independence and high integrity. But I would the Act can be circumvented by a Minister by say that there is no law or no rule or no enunciating a new policy, I am really afraid convention which requires that the opinion of about the future of our democracy. I think a Judge,.if he happens to be the presiding that all the labours and all the acrimonies authority of a Board, should be invariably roused by this business would have accepted by the Union Public Servic" served their purpose if we would be careful Commission. The Service Commission has in the future and avoid a repetition of to exercise its own judgment in this matter. It such things, such tempering with the Acts has to act according to its light. Therefore, and such dubious treatment of Parliament by the Public Service Commission had to the Ministers. Thank you. exercise its mind on the matter before it. Now, it follows from this that the Public Service Commission cannot be blamed for SHRI P. N. SAPRU: Mr. Vice-Chairman, I venturing to differ from the views of a body would like to speak briefly on this motion. which had a Supreme Court Judge as its In discussing this motion we are really Chairman. It could not regard the findings of flogging a dead horse. Government have the Supreme Court Judge on this body as very rightly, in my opinion, accepted the binding on itself. ,It could not abdicate its findings of the Union Public Service functions. Commission. Many harsh things have been said about the Union Public Service The Public Service Commission, I may Commission. I would like to point out that point out. Sir, is not composed entirely of under the Constitution, the Government was service members. It has bound to ^onsult the Union Public Service, Commission. 3987 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3988

[Shri P. N. Sapru.] an element drawn from in the reports which show clearly that in their non-official life also, and it has a service opinion the transaction had been concluded member of very high integrity and ability as even before the Bombay meeting, the Bombay its Chairman. Government would have be:n meeting only put a sort of coping-stone on it. justified in disregarding the opinion of the There are pages in the reports where they Public Service Commission if, in all the have criticised Mr. Krishnamachari. They circumstances of the cases, it could be said have gone to the extent of disbelieving him, that its opinion was perverse or so and it is a serious thing for a man occupying a unreasonable that no reasonable man would highly responsible or a dignified position to accept it as reasonable. Of course, I may just be disbelieved by two courts or two Judges. draw an analogy from one's experience of Now, Sir, I think their assessment of Mr. juries and jury trials. Courts |do not set aside Krishnamachari's evidence, whatever Mr. the verdict of the jury unless they think that Feroze Gandhi may say, is unanswerable. On that verdict is perverse or so unreasonable the 31st August 1957 I am omitting all that no reasonable body of men could give reference to what happened before the 31st that verdict. That is the attitude which August—on the 31st August Mr. Government has adopted, and I think, Krishnamachari had to finalise the answer to therefore, the Government rias set in this certain questions. He said in his evidence that matter a right precedent. his intention was to leave it to the Deputy I have read with care the Bose Board Minister .to answer. But he also said that he .Report, the Chagla Commission Report and actually indicated the way in which the much of the evidence that was tendered question should be answered. The actual before these bodies. That .evidence makes shape of the answer was his. He had Mr. very painful reading. The evidence of Mr. Patel's note about them. Mr. Patel had advised Krishnamachari makes VP' painful reading. him to disclose the facts. That should have put The evidence of Mr. Iengar and Mr. him on his guard. He should have looked into Bhattaeharyya makes very painful reading. I the pad. He had at one time two Ministers of am surprised, Sir, that in th" las* part of their State and one Deputy Minister to advise him. resolution refer'e...J should have been made But he felt he could do without them. He to the Evidence of Mr. Bhattaeharyya thought he could behave like a dictator and do and,Mr. Iengar and the injunction should as he pleased. Therefore, it occurs to me that have been laid down that courts or advisory it was his bounden duty to look into the pad, boards may not comment upon the evidence and if this transaction had not had his support of persons who give evidence befor:.: the or approval, then what was the obvious thing Commission or the Board. I think, sir that for him to do? He should have sent for Mr. that is a quaint rule to lay down. Patel and told him: "Look here, I am not happy about this. How is it that this thing has Then, Sir, I would like to say a few words occurred? You know what my views are. You on certain aspects of this controversy. Both know what the views of the Ministry are. the Chagla Commission and the Bose Board Well, you had only a casual talk with me. have taken the view that the whole truth has How did this happen?" Nothing of the kind. not come out, and the Bose Board has taken He comes to the House when questions are the view that the principal actor in this drama put and answers questions and now says "I was Mr. Patel. But may I point out that they was answering questions on the spur of the have not acquitted Mr. Krishnamachari in moment". In fact he makes a speech later. The regard to his responsibility for it? There are matter is again taken up by the House certain pages and passages 3989 Life Insurance [ 11 SEP. 1959 1 Corporation Inquiry 3990 on the 29th of November and then on the of truthfulness and he has left to us a 16th December, and it cannot be said that he tradition that we must eschew" evil in every was frank with the House. I venture to assert way. I do not think that it adds to the with some confidence that if his evidence is prestige or the glory or the credit of our placed before a body of IOO judges taken Party to come .to the rescue of Mr. from all parts of the world, the painful Krishnamachari just because he was one of conclusion they will come to is that the man us. I am not suggesting for a moment that is not frank, th#t tha man is one upon whose Mr! Patel, if I am to discuss the evidence, is word no reliance can be placed. If that is so, completely blameless. Certainly, he has it is a serious matter. shown over-enthusiasm. But I have a lot of sympathy for Mr. Kamat. I know he is a SHRI T. S. PATTABIRAMAN: No man of integrity and the only evidence question of 31st August and 19th September which impressed me in the case was that of as you allege. It was on different dates. Mr. Kamat.

SHRI P. N. SAPRU: I have read the thing. My friend has read the thing. You may May I, before concluding say a word about this assistance theory? I am very sorry that answer this question in a technical. . . this assistance theory was advanced by Mr. {Interruptions). Justice Bose. All industrialists have [MR. DEPUTY CHAIEMAN in the Chair.] contributed to party funds. But before a court or a body declares even tentatively that this is SHRI T. S. PATTABIRAMAN: 4th of the motive of the thing, it should have some September.... evidence to that effect. The case was never SHRI P. N. SAPRU: The writing is on 31st put, as lawyers call it, to the witnesses who August. The question was to be put on the came before it. It was a case which had never 4th September. May I just say one word? been examined by any . party and therefore, There were two witnesses before the Bose fairness demand-! ed, that the Board should Board. have put that case, if that was the thing which 1 am not going into the technicalities was operating in their minds. of the law with regard to 2 P.M. their evidence. But from There are many other things which can be a broad commonsense point of said about this transaction. Happily, there is view, I do not understand why the evidence one great merit about the Report of the of either Mr. B. K. Nehru or Mr. A. K. Roy Union Public Service Commission. It says should be discarded. They had nothing to that the transaction was proper and all agree gain by coming forward to support the point that there was no mala fide about it. Mr. of view of Mr. Patel. They know what the Vaidyanathan has gone. He was responsible point of view of the official world was in for this price fixation. If we accept that regard to Mr. Patel. Why should they come theory, then it becomes unnecessary to forward with those statements? And if Mr. speculate as to what happened before or Roy is to be believed, then on the 24th or after the transaction. I think my friend, Mr. 25th of June, Mr. Krishnamachari knew all Lavji, was very right when he said that Mr. about the transaction. I submit that in the Krishnamachari was nervous when he was face of this evidence, it is a tall order to ask answering questions in the House. One us to believe that Mr. Krishnamachari was a mistake leads to so many other mistakes. very virtuous person who has been the victim Therefore, I would wind. up by saying that of a Secretariat plot. Mr. Deputy Chairman, we should accept this Report and we are there are certain things which Gandhiji has thankful to the Union Public Service left to us. He has left to us a tradition of Commission for it. honour; he has left to us a tradition

3991 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3992 Mundhra drag, the officers concerned SHRI B. D. KHOBARAGADE were fully justified in coming to the (Bombay): Mr. Deputy Chairman, Sir, I have conclusion that the threat to the market carefully read the advice of the Union had not passed." Public Service Commission and the Resolution of the Government on the deal which was So far as this transaction is concerned, we entered into by the Life Insurance have got three or four reports before us. We Corporation. I regret that I do not agree have got the findings of the Chagla with the findings of the U.P.S.C, and I cannot Commission; we have got the findings of the approve of the Resolution of the Government Bose Board of Inquiry. We have got the based on it. The Resolution, in my opinion, U.P.S.C.'s advice. If we tak^ all these intq amounts to an impudent and dishonest consideration and compare all those effort to convert the most sordid, squalid and documents, what is the conclusion that we scandalous deal into an honourable affair and can draw? In my opinion, the advice of the to hail the villain of this drama as hero. U.P.S.C, can never be compared with the Sir, I may point out thai the Resolution voluminous reports of the Chagla itself is self-contradictory because it has Commission or of the Bose Board. In my been accepted by the Government that the opinion, the reports of the Chagla transaction in question was not entered into Commission and of the Bose Board of in accordance with business principles and was Inquiry are the work of intellectual giants also opposed to propriety on several when compared to the report of the U.P.S.C, grounds. That is the finding of the which is the work of pigmies. There is no Government, and at the same time, in the same doubt about that. Resolution, the Gov -ernment says, "Mr. SHRI P. D. HIMATSINGKA: In size? Patel's appreciation of the situation was correct and that the remedy' proposed by him was required in the public interest." SHRI B. D. KHOBARAGADE: I am not Well, Sir. I am rather unable to referring to the size. I am comparing these understand how a deal can be improper as recommendations and reports. well as justified. If we have got any sort SHRI N. M. LING AM (Madras): What is of justification, then it may be said that your yardstick about intellect? the whole deal is proper. But when, you are saying that the deal is improper, then SHRI B. D. KHOBARAGADE: I do not with any amount of justification, it cannot be want any interruption. said that \ it is a proper deal. ore, when Let us see in the the Government is saying that the deal is problem has been approached by- improper and at the same time, that there was the different Boards. The Vivian pro-justification, 1 am not able to Bo approached the understand this contradiction. It is ge problem with an open mind.. Whenever it how the U.P.S.C, has arrived at this was possible to any benefit of doubt, it has conclusion that the whole deal has been justifi given it to Mr. Patel also. So far as the d Ln the interests of public and for Calcutta meeting of the 18th June, was saving the Calcutta Stock market from concerned, the Bose Board has come to the some economic crisis. What is the opinion or conclusion that there' were contradictory conclusion of the U.P.S.C? It Si reports and therefore no version should be accepted, and that'the benefit of doubt should "While it would possibly have been be given to Mr. Pate! and il accepted the argued that there existed no immediate version of Mr. Patel. Therefore, if we go into danger to the Calcutta Stock Exchange the Report of the Bose Board, we will come arising from the to the conclusion 3993 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 3994 that it "Had an open mind and the i superbly well. But if it was sitting J Board wanted to find out who were the in judgment over Mr. Patel, then I must persons responsible for this deal. If we see submit that it has miserably failed in that the Report of the U.P.S.C, it seems that they respect. had already arrived at some conclusion, and that they wanted to find out how to justify What is this Mundhra drag? The those findings and conclusions. And U.P.S.C, wants to justify the whole black in arriving at conclusions and findings deal on one ground, that it was justified they have suppressed certain facts and because of the prevalent rumours in they have only mentioned those facts which the market that the i Mundhra shares are favourable to Mr. Patel. I am were being thrown away at distress prices rather very sorry to note 'that the U.P.S.C, and the market I was flooded with them have not referred to the questions or problems and there ; would be some sort of that have been referred to in the Bose Board crisis. Now 1 who is this Mundhra? In a of Inquiry Report. What about the telegram judgment ! Justice Tendulkar made of the 13th June that was sent by Mr. reference to I Mr. Mundhra and said that Sodhani * to Mr. Mundhra? What about Mr. Mundhra adopted a "thoroughly the rumours that were prevalent from the dishonest attitude" and a "thoroughly 17th June to 25th June, that Mr. Mundhra dishonest conduct." What about Mr. B. was getting about Rs. 1.25 crores? Rama Rau of the Reserve Bank? He wrote What about the press reports that there to Mr. Patel on the 17th February, 1956 was no such Mundhra drag and the flooding saying that the shareholders of Osier were of the market by Mundhra shares would defrauded by Mr. Mundhra. Mr. not create any crisis? There were no Ramnath of the Reserve Bank reported to such reports as alleged. What about the Mr. Patel about the manipulation in the pattern of movement of Mr. Patel and Mr. accounts of some bank. This information Mundhra? We find from the Report that was with Mr. Patel all the time, when he the movements of Mr. Patel and Mr. entered into this deal. From all those Mundhra have synchronised in Delhi, reports, can any sane person, who would like Bombay and Calcutta. What about Mr. to invest his own money in share, have Bhagwati? Mr. Bhagwati was Mr. Patel's any connection with Mr. Mundhra? counsel, and when he was asked about any Apart from that, Sir, Mr. C. D. Deshmukh, press reports which mentioned that there the former Finance Minister, himself has was some sort of crisis in the Calcutta Stock "advised against investments in any Exchange market, Mr. Bhagwati had to admit Mundhra concern." not that the concerns that there was no such press report prior to were bad from the financial point of view but the 17th June, or 25th June also. So all because of Mr. Mundhra's association those facts which are relevant to the issue and with these concerns. And what had Mr. which conclusively drive at the guilt of Mr. Patel to say? He had deposed before the Patel, all those fact? have been Inquiry Board: conveniently omitted and ignored by the U.P.S.C. And what do -we find? "What I recommended to the Finance They have blindly accepted Mr. Patel's Minister was that it would1 be unwise to version everywhere and exonerated hirn. invest in shares of companies whose Sir, I wonder, having gone through management is in the hands of Mr. the U.P.S.C. Report, whether the U.P.S.C, Mundhra. One cannot wholly approve of it. was acting as a counsel for Mr. Patel or it That was the reason. If you ask me was sitting in judgment over Mr. whether that consideration was still opera- Patel. If it was acting as an tive in June, 1957, then I would you and advocate pleading the case of Mr. Patel, say, 'Yes'." I must admit, that it has done That was the answer given by Mr. Patel before the Bose Inquiry Board. 3995 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 3096 [Shri B. D. Khobaragade.] Even on the 25th had enjoyed a tour, a stay and a holiday'in June he considered j Mr. Mundhra an outcast England at the expense of Mr. Mundhra. and said that j nobody should have any SHRI BHUPESH GUPTA: And travelled dealings with him. In spite of these things, to Bombay at his expense also! what did wc find in April, 1957? Well, we can presume that in May or June there was SHRI B. D. KHOBARAGADE: Yes,' I was some sort of crisis, but what about April coming to thai also. On the day that when some shares were purchased by L.I.C, transaction was put through at Bombay, his air from Mr. Mundhra? Of Course, there is faro was paid by Mr. Mundhra. Mr. Patel no doubt that this .transaction was put believed the version of this man only and through according to the advice of the came to the conclusion that there was some Investment Committee. But what about sort of crisis. All right; he believed that the direction that was given by the Finance there was a crisis. Did he try to find cut the Minister that we should have no connection truth? Did he verify the acts? What steps whatever with Mr. Mundhra? Was that did he take? While he swindled away public direction to be flouted just because they money amounting to about Rs. 1.25 crores, wanted to help Mr. Mundhra? what action did he. take from the 18th June till the 24th June, during those six d?.ys? When And, Sir, what is the story of the Mundhra there was such a great crisis in the drag? Was there really any drag? I have Calcutta Stock Market, what action did he already referred to press reports and in all take? He did not take any action. He the press reports they have stated that at that did nol bring this question to the notice of the time there was no drag and no crisis. I would hon. Minister till the 22nd or the 23rd, when just quote a few newspaper comments he met him in Bombay. Well, is this the before you. The "Indian Finance" of the way of dealing with a critical situation? Did he 22nd June says: think about it? Did he apply his mind to the problem? Well, he has admitted that he "It is certain that the investment had no solution whatsoever to this problem. outlook is one of ascending prices." Solution was not found by Mr. Patel, but by Mr. Mundhra himself. He came and offered There is no reference to any crisis. the solution saying, "Please buy my "Prices were never more attractive." shares and relieve me and relieve the Calcutta market." So, with all these things What about the "Commerce" of the sam.) we come to the conclusion that there was no date, Sir? It says: crisis at all. We have only to believe the "The downward trend Witnessed in word of Mr. Mundhra and Mr. Chaturvedi. shares last week has proved to be a short- There were rumours in Bombay and lived affair. The markets thus begin to Calcutta on the 17th i June that Mundhra look up again." was able to get a sum of about Rs. Ii crores from the L.I.C. Shri A. D. Shroff, Shri Now the "Indian Finance", the "Commerce" K.R.P. Shroff, Shri Esplen, all of them were I and the other papers which gave reports, all eminent financiers and business peo-! pie. arrived at one conclusion that there was no They have said that there was no Mundhra such crisis. So we have to accept the version drag. of Mr." Mundhra and Mr. Chaturvedi and (Time bell rings.) believe that there was such crisis. Mr. Chaturvedi was the person responsible for Only about three or four minutes I | shall mentioning this Mundhra ^rag to Mr. Patel. take, Sir. And who is Mr. Chaturvedi? Mr. Chaturvedi is an old associate of Mr. Mundhra, who 1997 Life Insurance [ 11 SSP. 1959 ] Corporation Inquiry 3998

MR. DEPUTY CHAIRMAN: Just tw'o "Well, there was a crisis in the stock t and I minutes. have thus solved the problem." As it appears, nobody comes forward; everybody SHRI B. D. KHOBARAGADE: I have is shirking his own responsibility. to refer to only one or two points. I say that if we take into | consideration all these In conclusion, Sir, I would only say this—this facts, we come | to the conclusion that the is of very great importance. So far as the whole deal | was a shady deal. And apart U.P.S.C, is concerned, it should have applied from j that, Sir, we have to consider what its mind and come to the conclusion the conduct of the people before the ] deal without fear or favour. In my opinion the and after the deal is. Well, it has been UPSC not come to this conclusion fairly. quoted at length by some other Members. That is my thinking. They must have And the main complaint of Mr. Justice Vivian some motive for arriving at this Bose had been that "we have not been told the conclusion; otherwise they must have some whole truth." And if we go through the pages apprehensions about the attitude of the oT Vivian Bose Board's Report, we also come Government towards this problem. These to the conclusion that nobody has come days we are expanding our public sector and forward to tell the truth. Why? If we will have to appoint more Government the deal was not improper, why did no officials, who will always be coming in one come forward with that fact? That tel contact with big business magnates. gram which was sent on the 13th June was Therefore in the interests of tax-payers, we suppressed, and it was dramatically want men of integrity in the services. The produced in the other House by Mr. Feroze U.P.S.C. should have independently Gandhi. When Mr. Krishnamachari was thought over this problem and arrived at pro- asked questions in the other House, he per conclusions and punished the culprits. I gave evasive answers. When the question must express ultimately my thanks to one was raised in the Executive Committee of the Member of the U.P.S.C. Mr. Pillay, who was L.I.C,, the Chairman and the Secretary of bold enough to think independently and the L.I.C, suppressed facts and gave submit a Minute of Dissent. He rendered evasive answers to Mr. Hashim Prem ji. a service to millions of citizens of this country. What do all these facts drive at? I think, Sir, that the whole Mundhra deal appears to DIWAN CHAMAN LALL: ' Mr. Deputy be like an unwanted illegitimate child. Chairman, I have listened to this debate Having procreated it, everybody with a great deal of anxiety and concerned with it is shirking the perturbation for the simple reason that I do responsibility of paternity,- and striving not think this House should set itself up as a hard to disown the baby. final court of appeal in such matters. Two enquiries have been held by two (Time bell rings.) very great men, one the Chief Justice of I will finish. Sir. I shall just cover one Bombay who is now our Ambassador m small point only. Washington and the second by an equally eminent formed Judge of the Supreme Court SHRI P. D. HIMATSINGKA: He is trying assisted 1 by very able men, one of them, to cover the baby. there I is no doubt about it, with an interna-; tional reputation. Ordinarily the matter should SHRI B. D. KHOBARAGADE: It is have ended there but under , the Constitution disowning a baby. Now, Sir, if the deal all disciplinary mat-| ters referring to the was.proper, if it was justified on the ground civil services i have got to be referred to the that they wanted to relieve the Stock Market Public of some crisis, I think everybody would have come forward and taken the credit saying, 3999 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4000 [Diwan Chaman Lall.| Service Commission ihe Minister with the request that he and quite rightly the Ministry referred these should make that as his own case. Is matters tc the Public Service Commission. that a document on which any person Whether we think rightly or wrongly should rely? Is that a document that about the decision of the Public Service a wise man like Mr.. Shiva Rao Commission, there is no doubt that the should trot out before this hon.' finality has been reached. In my opinion— House and ask this House to accept? and I make no bones about it—the U.P.S.C, is Accept it as what? As, a document not enjoined by the Constitution to give a in justification of those very people finding. It is enjoined merely to fix the quan- who have asked their lawyer to pre tum of responsibility for the punishment that pare it for them. It has nothing is to be meted out to any official. In this case whatever to do with Mr. Krishnama the U.P.S.C, has gone a little beyond the chari, nothing whatsoever. You will constitutional requirements of the case, recall in this very connection that namely, they have gone into the findings and Mr. Krishnamachari gave his evidence. given their own findings in regard to this When he gave his evidence, not one matter, Be that as it may, my hon. friend single question was put to him about Dr. Sapru, who is not present here at the this very document. Why not? And present moment, said a little while ago that should my hon. friend Mr. Shiva Rao it looked like flogging a dead horse. come to this House and ask us to Having said that, he promptly put on rely upon or to accept in any manner his spurs and took a whip in his hand whatsoever a document of this nature, and started flogging all the dead horses that are regarding which even the propounders visible in this sorry business. That is why I am of that document, the makers of that so astonished that a wise, balanced and document. felt shy to ask. experienced Member of this House like my Mr. Krishnamachari a single question? hon. friend Mr. Shiva Rao, for whom I have got the greatest affection and admiration, should have stood up as if he were arguing a case before a Third Class There is another point that my friend Magistrate about a criminal. Ho was trying to raised. I am sorry that he raised it again defend whom? Trying to defend Mr. Patel. and thai is in regard to the alleged Mr. Patel nol need my learned friend's approval given by Mr. Krishnamachari. defence. In the course of defending Mr. I am not arguing a case. I am merely Patel, I am very sorry that he casl saying that I am averse to ithese things but certain aspersions, if you like to call it, on these things have been mentioned and that is Mr. T. T Krishnamachari and I would like to why I am trying to put the record right. say, although I am averse to the discussion Where is that approval:' Now he was asked. of any such matters in this House except the There were some casual mentioning to the prin-hat arises out of this business and I Minister and on this has been built up shall come to that in a minute, nevertheless, the whole edifice of Ministerial approval of because my friend Mr. Shiva Rao this particular act. But what are facts? mentioned this particular matter, I would The- Bose Board very rightiy remarked like to deal with it in a minute or two. when they asked this question of Mr. What is it that Mr. Shiva Rao says? He talks Patel:: "Did you take that, namely, the about a document. A document prepared statement made by Mr. Krishnamachari in a by whom? Prepared by the Counsel of hurry 'look into the matter', Did you take the—if you will pardon my using that that 'look into the matter' or 'Take up expression—accused, handed over to this matter with the L.I.C, as one of the witnesses had said, as approval or sanction of the Minister?" Mr. Patel says: "I took that to mean that I should put the proposal to the L.I.C. pointing out to them the 4001 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4002 policy implications and asking them if against type of working results in. I hold a from in the background of that policy implication, my hand. On page 13 of the Ninth Report of they would be prepared to consider the P.A.C. for the year 1953-54 you will find purchasing shares which seemed to us also, in a statement by the Committee about a certain that very brief discussion, to be the only transaction and it says: practical proposition quite apart from anything else." "No contemporaneous record of the secret conversations and discussions that Now I ask my friend, is that took place between the Ordnance approval? These are certain Consulting Officer attached io tne office of decisions that Mr. Patel arrives at in his own the High Commissioner for India in mind about these matters. 'Look into the London and the Secretary, Ministry of matter' does not mean that the Minister has Defence or the Financial Adviser, Defence given his approval. But then, why go us far as Services, when the former came to India had been kept although the discussion that? Was it not in April 1955 after Mr. Patel himself had put il on record and got the involved huge financial commitments by approval of the then Finance Minister that the raising of the price of the stores in Mundhra's shares should not be touched, that question by £1.17.0 per unit." in no circumstances should those shares be purchased—it was a suggestion by Mr. Patel, "This has become all the more neeessary it was agreed to by the then Finance Minister in a case where the deal has to be entered it is on record that the Minister, Shri into on a noncompetitive basis." Deshmukh said 'I agree'—having done that, And who was the Secretary for Defence at exactly a year later who is it that changed the that time? Mr. H. M. Patel, What was the policy? Not the Minister, not the Finance transaction? Mr. V. K. Krishna ' Menon, the Minister but it is Mr. Patel who at that time High Commissioner in London at the time was the chairman of the L.I.C, who makes the had sent a cable to the Government of India investment of Rs. 11 lakhs in Mundhra's saying that the hand-grenades that we needed shares in spite of this injunction which is on so urgently from France could be purchased at record. Is that correct? Is there any challenge the price of £6 per unit. Mr. Deputy at al] of. that particular statement? Non Chairman, I want you to remember that whatsoever and at that time Mr. Krishnama- figure. He advised in that cable that the price chari was not in the picture. He was not the was high. But our need was great, and Finance Minister at that time. He had nothing therefore. he advised the purchase of these whatever to do with these transactions and yet hand-grenades. The Government of India in that policy, laid down in writing, agreed to by their dire need of the time sent a cable saying, the Minister, is changed. Changed by whom? "We accept the offer". Immediately this By Mr. Patel. particular gentleman who is mentioned here, this officer, this Ordnance Consulting Officer Then another extraordinary thing attached to the High Commissioner in London happens. It happens how? It . . . happens that there is not a single note in regard to this matter by Mr. Patel. When he is SHRI B. SHIVA RAO: Sir. on a point of asked about this matter, he says: "That is the order. Mr. Deputy Chairman, is all this system of my working. That is how I v. That reference in order when discussing the L.I.C, is rather extraordinary. You will forgive me and the Government's Resolution on these for referring to a little matter, to what this papers? particular 4003 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4004

DIWAN CHAMAN LALL: Why is my hon. I am very sorry, Mr. Deputy Chairman, friend so sensitive about this matter? I am but I should be very grateful for a little reading from a report which is completely more time. I do not usually take more time ! relevant to the point at issue and. the point at than is allowed to me, but th s is a matter of issue being that no notes were being kept by rather serious import. Mr. Patel, of these transactions, who now comes before the world to say that he was not responsible and that it was Mr. The principles that arise for Krishnamachari who was responsible. Is that consideration out of this sorry not relevant? If that, is not relevant, then I do business—and let us consider it to be not know the meaning of the word relevant. ! a dead horse, not worth kicking—tire Here is this gentleman (Interruptions). these: First of all ministerial responsibility, secondly the responsibility of the civil Ms. DEPUTY CHAIRMAN: Order, order. servants to the Mini; and thirdly the DIWAN CHAMAN LALL: My hon. friend responsibility of civil servants to need not be sensitive about this. This is a Parliament. These are the great issues that public matter, and a public matter which are at stake. And finally the fourth the role involves the Government of India in a loss of that the Public Service Commission should half a million pound sterling, not a small play in such matters. There is no fifth issue, matter. And who was the person who as far as I am concerned. These are the involved us in this and kept no note of the issues and Ihey are of very great import secret conversations that lasted one and a half indeed, in a demo- hours in the office? Mr. H. M. Patel, the then cracy, in a state of affairs, where it is Defence Secretary. Now, if this gen*leman necessary for us to take the Ho was capable of doing these things at that time, of Parliament along with us, the he was certainly capable of doing exactly the administration along with the Houses of same thing and the same thing he did with Parliament, in developing economy where regard to this sorry transaction. I am sorry for enormous sums of money, public money, the man. He was an able civil servant. He did are being invested in great and big good work during the partition. But that does concerns. And whom do we have for all not mean that you could call for any innocent this? We have the man's head on a charger because something civil service which was not meant for these wrong had been done by this particular civil purposes. There are many able men in the civil service. There are many friends of servant. I would not have referred to this, Mr. mine in the civil service. But it would be Deputy Chairman, but for my hon. friend's wrong to have the idea that they are capable reference here, in my opinion, utterly wrong of putting their hands to anything and reference and misleading reference, a everything in the world. They were meant reference which tried to implicate innocent for preserving law and order. Their whole people and exonerate people who are not object or training and their whole education innocent in this matter. was directed towards that particular end. Now 1 do hope that the debate will take But the whole aspect of administration has another turn after what I have gfticj, that is to changed. It has changed m such a manner say, the House will consider the principles that it has to be a government of experts. that we should have. And one cannot, therefore, except that (Time bell rings.) persons who were trained for a particular job, namely, to maintain law and order, would be capable of putting their hands on other jobs as well, jobs which need scientific training and scientific knowledge. Hence these problems that we are discussing. 4005 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4006 In England, Mr. Deputy Chairman, there is means, Mr. Deputy Chairman, of finding no such thing as a public service commission methods of work which would be modern. to which the I conduct of a civil servant is to be referred. If a civil servant is found wanting, For instance, in Great Britain— you will he is dismissed or he is asked to resign. That forgive me, Mr. Deputy Chairman, if I take a is what happens in England. Why did we couple of minutes more . . . carry the burden upon our shoulders by insert- ing into the Constitution a provision whereby every such case of disciplinary action has to SHRI AMOLAKH CHAND: You may go be referred to the Public Service on. Commission? There are good men in it. No doubt they are good men. I had a list of them MR. DEPUTY CHAIRMAN: He is not in a little while ago here. There are two the Chair. engineers, two ex-Vice-Chancellors, there is an ex-Speaker and there are two I.C.S, DIWAN CH AM AN LALL: Sir, in officers. But how do you expect an engineer England, Lord Attlee wrote an article and to discuss matters of this nature? An engineer there was the Crichel Down Case to which would be perfectly within his rights in reference was made by my hon. friend Mr. discussing a technical engineering matter. But Shiva Rao. What happened? you are entrusting the Constitution to these gentlemen. You are entrusting your whole administration to these gentlemen. You are What happened in that case was exactly what entrusting the judicial findings to these happened here, but the Minister resigned. He gentlemen. How do you expect them to was in no way involved in this thing. These discuss these judicial findings? After the are matters which are to be dealt with by the Chagla Commission had reported, after the Secretaries but the duty of the Secretaries is Bose Board had reported, after these judicial not to mislead the Minister. The loyalty and findings have been arrived at, an engineer the ability and the frankness and the truthful- comes along arid says: "This is all wrong. I ness of the civil servants dealing with their am right, and you are wrong." It may be that Ministers has to be guaranteed. A tradition he is right. It may be that what the Union has to grow up. No such tradition has grown Public Service Commission has said is right. I up here because our own system of do not know. I did not have the time, I must democratic Government is very young. confess frankly, Mr. Deputy Chairman, to go Therefore, we have to look into such matter. through these volumes and volumes of When Mr. T. T. Krishnamachari resigned, he evidence which Mr. Feroze Gandhi took five did absolutely the right thing, Mr. Deputy months to study. But I have read enough and I Chairman. He was right because he took the have considered enough as a lawyer and still I right constitutional course because although do not know and I cannot say whether one is his officers had failed him, nevertheless, who right or the other is right. It may be that the had his constitutional responsibility to this U.P.S.C, is right. But these are matters of very House and he discharged that as an honest great import. We cannot leave the destiny and man. May I beg of you, Mr. Deputy the future of this country in the hands of the Chairman, to ask the Central Government to appoint a Commission to go into matters U.P.S.C. Nor can we leave it in the hands of relating to the civil servants? The the civil servants. We cannot leave it in their Commission that was nted in 1911 was the hands. We have got to find ways and first one. Thereafter came the Lee Commission which did not deal with the services 4007 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4008 IDiwan Chaman Lall.] but dealt with only And then he goes on: the emoluments of the Europeans and it gave "It is very difficult to believe that when passages to grand-mothers and great grand- the Minister was in Bombay and easily mothers because they had been dependent on available, and when Mr. Patel was the particular civil servant. The time has now 'advising' tht Corporation to enter into the come for us to hold another enquiry—not the largest transaction it had so far entered into enquiry which my hon. friend's Ministry held. in its history and that too with a man whose That is not sufficient— a high-powered antecedents Mr. Patel knew, he would act enquiry into the civil service of our country, on his own responsibility without obtaining its connection with Parliament, its duty the approval of the Minister. Why should towards the Ministers and its relationship with Mr. Patel act on his own responsibility with the developing economy of our country. regard to so unusual and doubtful a. transaction?"

DR. H. N. KUNZRU (Uttar Pradesh) : Mr. Deputy Chairman, we have a variety of 1 Again, Sir, Mr. Chagla ha ' observed that material before us in order to enable us to even if the Finance Minister had not given his judge what conclusion we should come to approval to the purchase of the Mundhra with regard to the responsibility, both of the shares, his subsequent conduct showed Minister and the civil servants connected with acquiescence in thr deal. He says, referring to what is popularly known as the 'Mundhra Des''. certain documents,

SHRI BHUPESH GUPTA: Scandal. "... the importance of these documents lies in the fact that whether the Minister DR. H. N. KUNZRU: You will remember, Sir, that when this matter first came to light was aware of what Mr. Patel had done on Mr. Justice Chagla, Chief Justice of the the 24th June or not when he did come to Bombay High Court, was asked to enquire know of these transactions, he never into the matter. He received a great deal of repudiated the ;cetion of Mr. Patel. evidence and came to the. conclusion that the Therefore, clearly there is acquiescence on whole truth had not been told. Yet, on the the part of the Minister in the part played materia] available to the Chagla Commission, by Mr. Patel in bringing about the trans- it came to the conclusion that the Minister's action of the 24th June. The lack of responsibility for the Mundhra deal could not repudiation on the part of the Minister be gainsaid. I do not go into it in detail would go to support Mr. Patel's story that because my hon. friend, Shri Shiva Rao, has the Minister had approved of the already referred to it but I should like to make transaction in Bombay of the 24th June." one or two brief quotations from ft in order to make what I have said clear. Mr. Chagla said, Sir. these are the conclusions of Mr. Justice Chagla. Now, what did the Government do "I would prefer to accept the positive when it received the report of the Chagla evidence of Mr. Patel and Mr. Commission? I shall not go into those matters Bhattacharyya, especially as Mr. Patel's that were discussed in connection with the version is strongly supported by the appointment of a Board of Enquiry to consider probabilities of the case and also by certain the conduct of Shri Patel, Shri Kamat and, I subsequent events to which I would draw believe, Shri Vaidyanathan but I shoved like attention". to point out that in the Resolution: that Government brought, forward in both 4009 Life Insurance [ 11 SEP. 1959 1 Corporation Inqniri/ 4010 the Houses of Parliament, asking for approval DR.^ANUP SINGH (Punjab): By for the appointment of a Board of implication. Enquiry, Government had accepted the SHRI P. N. SAPRU: Let me tell .you ... findings of the Commission only on the point that the transaction was not. a proper DR. H. N. KUNZRU: You need pet tell me transaction. I pointed out the inadequacy of anything at all. I will iell you what the facts the Resolution and said that if Govern- are. I shall come later to what I have to say ment wanted to know the whole truth which about Shri Krishnamachari. With regard to should have been the principal i anxiety, it the point raised by my hon. friend, Mr. should give a free hand to the Board of Sapru, I think the Bose Board of Inquiry, Enquiry and ask it to find out as to who was said that they were not concerned with the responsible for the Mundhra deal but this investigation of facts with regard to Shri did not commend itself to Government. Krishnamachari. It goes further and Had the Government really accepted the disbelieves Shri Krishnamachari. findings of the Chagla Commission in full, it could never have appoin-ed any Board of SHRI P. N. SAPRU: There was some Enquiry at all but when it appointed a Board ratification by Mr. Krishnamachari ... of Enquiry, it should have allowed the Board to go into all matters. When a Board DR. H. N. KUNZRU: Why is my hon. was appointed in spite of the verdict given by friend so impatient when I have said that I Mr. Justice Chagla. it really meant that shall come to the other points in the Bose another body was going to be Report regarding the statements made by appointed to reverse the decisions. Shri Krishnamachari? Now, you cannot make any Board of Enquiry to sit in judgment on the Chagla Commission's Report , with its hand tied Now, with regard to Shri Krishnamachari, behind Its back. It was asked only to there is a reversal of Mr. Justice Chagla's look into the conduct of certain civil finding in this way that while Mr. Justice servants. Now, Sir, this Board, which Chagla held that the civil servants' were not according to its own admission received primarily responsible for what had been done, much the same evidence that Mr. Justice the Commission held that were responsible Chagla ; had done, reversed Mr. for the deal. Otherwise they could not be Justice Chagla's decision. It hold that taken to account. However, I shall go further the Finance Minister had no responsibility for and point out that this inquiry conducted by the purchase of the Mundhra shares in the Board popularly known as the Bose certain trans; Board, has done nobody any good. The est officials appeared before the Board of Inquiry to give evidence—the Governor of the SHRI P. N. SAPRU: Where has the Bose Reserve Bank, the Chairman of the State Board said that? It has never been said. Bank of India, the Principal Finance Secre- tary, the previous Finance Minister. Shri DR. H. N. KUNZRU: The Bose j Krishnamachari-p-and yet the Board says that Board has come to the conclusion... j none of them has told the whole truth. Again, Sir, Shri Krishnamachari said that he saw Mr. SHRI P. N. SAPRU: No; no; it has i not. Mundhra last in January 1957. The Board of Inquiry has disbelieved him on this point and DR. H. N. KUNZRU: Well, it holds Shri said that there is evidence to show that he Patel and Shri Kamat ! responsible saw Mr. . . .

Sara P. N. SAPRU: It has not . . . ' 4011 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4012 [Dr. H. N. Kuhzru.] Mundhra in May or June and further expressed its belief that at the matter and come to certain conclusions. some of these meetings the L.I.C, investments But they have been very severe lv criticised. must have been considered. They virtually have be?n accused of having been partial to a distinguished civil servant. Take one more point and that is the The Commission was supplied all the papers question of the Finance Minister's knowledge in connection with the transaction. It had of the Mundhra deal when he answered the therefore before it the two Reports, the first question on the subject which was put by Report of the Chagla Commission and the Dr. Ram Subhag Singh in the.other House. Report of ths Board of Inauiry presided over by Mr. Justice Bose. Which conclusions .[THE VICE-CHAIRMAN (Shri Akbar Ali Khan) could the Public Service Commission in the Chair.] Shri Krishnamachari denied that accept, those contained in the Chagla he had any knowledge of the material facts Commission's Report or those in the Report then but the Commission says that it does not of the Board of Inquiry? It was not a believe Shri T. T. Krishnamachari on this simple matter point. It takes the view that Shri Krishnama- which had been decided by a judicial chari before modifying the answer suggested authority. If we are really anxious to maintain by the Finance Secretary must have looked the dignity of the judiciary, then I must into the paper in the pad that was supplied to point out that Mr. Justice Chagla was the him. It was clear was he knew what the total Chief Justice of Bombay High Court when amount involved in the transaction was and he conducted the inquiry and that all the further he knew the circumstances in which witnesses who gave evidence before him gave this transaction was entered into. If you take it on oath. The Board O'f all these things into consideration, can you be Inquiry did not have a single serving Judge on content, Sir, wiih the technical verdict of the it and it could not administer oath to any Board of Inquiry with regard to the guilt of witness. Ifther< anyone here is thinking of Shrj Patel and Shri Kamat? the dignity of the judiciary, then I say that the. conduct of the Government in not fully Now, the whole matter went before the Public accepting the findings of the Chagla Service Commission. The Union Public Commission ought to be unhesitatingly Service Commission, I am very sorry to say, condemned. Now, I do not want to go any was criticised by my friend. Diwan Chaman further into this matter. I think the Public Lall. He questioned the competence of the Service Commission had, because of the members of the Commission to discuss an circumstances, to apply its own mind to the issue relating to the propriety of a deal entered material placed before it and it has come to into by members of the Indian Civil Service. certain conclusions and if we are to be Now, Sir, a man may be an engineer. He may not have held any responsible position in guided not by technicalities but by broad t>*"> Government of. India or in the service considerations, I have no hesitation in saying of any State. Does ereby i become incapable that its judgment is much more reliable than of judging important issues? And after all, this that of any other authority. The Union Public Commission does nbt consist en-tirely of Service Commission has virtually found Government servants. It has, ast three itself in agreement with the Report of the members who are taken from outside Chagla Commission and who could blame it Government e. All of them have considered on this point? Is it for this reason that it is proposed to clip the wings of the Commission and reduce its power in future to make full enquiry into the conduct of civil servants when any matter relating to 4013 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4014 them is referred to it? I think it will be ar. evil chari, my personal relations with hirn, were day for India when in order to enforce our cordial both before and after he became a own view we undertake legislation to curtail Minister. He was extraordinarily kind to me. the powers now enjoyed by the Union It gives me great pain, but I consider it to be a Public Service Commission. The 3 matter of public duty that I should not allow P.M. practice in England has been my personal partiality, my personal feelings, referred to. The form employed by us to stand in my way in the consideration of a may not be used in England, but in that matter of fundamental importance to the democratic country, with traditions existing administration of this country. for centuries, the civil servants are given the The second point that I should like these amplest opportunity to defend themselves. people to look into is the evidence given by Shri T. T. Krishnamachari himself before the SHRI P. N. SAPRU: Quite right. Board of Inquiry. My hon. friend, Diwan Chaman Lall, said that he had gone through DR. H. N. KUNZRU: It is, therefore, highly the evidence . . . unfair to the Union Public Service Commission, either to question the manner in DIWAN CHAMAN LALL: I have not. which it proceeded or to question the correctness of the judgment on the facts THE VICE-CHAIRMAN (SHRI AKBAR ALI placed before it. KHAN): He said that he could not go through it. There is one more point that I should like to DIWAN CHAMAN LALL: I want a refer to very briefly before I come to the superman like him to go through nineteen Government Resolution. Some hon. Members volumes of evidence. have tried to show that Mr. Krishnamachari was not at all responsible for the purchase of DR. H. N. KUNZRU: I am sorry that he did Shri Mundhra's shares in certain concerns. But not read the evidence given by Shri T. T. they should go carefully into two matters. Krishnamachari. If he had, he would not have They should re-read, if they have not read defended him in the manner in which he did. already the report of the discussion that took He might have still adhered to the opinion place in the other House on the 16th that he has expressed, but his defence would Decembei, 1957 with regard to the purchase have taken another and a more credible form. of Mundhra shares. Was there any Now, this evidence itself shows that Shri T. matter.connected with the transaction which T. Krishnamachari knew the main facts about was repudiated by the Finance Minister, the deal. There is no denying that and it is on whether it was the purchase of the B.I.C. and the basis of that, I believe, that the Board of Osier shares, or whether it was the question of Inquiry has disagreed, to use a mild word, the price paid for the shares, or any other with Shri T. T. Krishnamachari on two thing connected, with the purchase of the cardinal points, to which I I have already shares? He defended the whole transaction. referred. Does this fact not agree with Mr. Justice Chagla's view that even if Mr. Now, I come to the Government Krishnamachari did not know all the facts Resolution. What did the Government do, in before the deal was entered into, his the face of the facts that I have mentioned? It subsequent conduct showed that he found itself compelled by convention, as it acquiesced in whatever haid been done? I am says, to accept the decision of the Union Pub- not interested in Shri Patel and I have no lic Service Commission. The Commission grudge against Shri T. T. Krishnamachari. In was in a very difficult position. As my hon. friend, Shri Shiva fact, my relations with Shri T. T. Krishnama- 59 RSD.—4 4015 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4016 [Dr. H. N. Kunzru] Rao, has said, no less a DR. H. N. KUNZRU: ... to prove that Shri personage than the Home Minister of India T. T. Krishnamachari was wholly innocent, • had, while the U.P.S.C, was considering the and that the civil Servants were wholly to question of the guilt of Shri Patel and Shri blame for the purchase of Mundhra shares, Kamat, delivered a speech, completely adopted a course which has done no good exonerating Shri T. T. Krishnamachari . . . either to the civil servants or to Shri T. T. Krishnamachari, or to the morale of the civil service on which the future administration of SHRI BHUPESH GUPTA: That was the country depends. unveiling the portrait. SHRI MULKA GOVINDA REDDY (Mysore): Mr. Vice-Chairman, this Mundhra DR. H. N. KUNZRU: I say that it speaks volumes for the courage of the Union Public deal is one of the shady deals of the Service Commission and for its sense of duty, Government that has come to light. It is that it did not allow its judgment to be influ- possible that if the deals of the Union enced by the wishes of the executive. Yet Government and the deals of the State what has the Government done? As I said, Governments with big business concerns and Government has grudgingly accepted the with other Marwaris are probed into, they U.P.S.C's Report, but it has also referred to might reveal the same sordid story as this deal Shri Shivashun-mugam Pillai's opinion, has revealed. In this sordid drama there are although i* does not form part of the Report, many important actors. The main actors in and has decided to drop the proceedings this drama are Messrs. T. T. Krishnamachari, against Shri Patel. Could it not have gone Haridas Mundhra, H. M. Patel, Kamat, further and said that it exonerated Shri Patel of Sodhani, Bhattacharyya, Iengar, the Governor all blame? In the circumstances, I think that of the Reserve Bank, Chaturvedi and was the only honourable course open to it, but Vaidyanathan. Mr. Chaman Lall was very did not do it, because of the opinions eloquent in trying to convince this House that expressed both by the Prime Minister and by Mr. T. T. Krishnamachari was all innocent the Home Minister earlier and because of their and that the main culprit in this deal was Mr. desire, which was all too evident in their H. M. Patel. speeches, to get certain civil servants Sir, each one of these actors in this drama condemned. It is a great pity that an important played his own part. What exactly the part matter should have been discussed in that they played is, is to be ascertained by the way. Had the Government really adopted House. It is true, as has been made out in the another line, had it gracefully accepted the Bose Board Report, that these high officials Chagla Report, none of the unpleasant who are all concerned in this matter have not incidents that have come to light would have told tfie whole truth, but from the material come to our knowledge. I think that both the facts that have been disclosed in the Chagla civil servants, the Governor of the Reserve Commission Report and the Bose Board Bank, the Chairman of the State Bank, and the Report and from the views expressed by the Finance Minister would have gained a great Public Service Commission one can discern deal thereby. But the Government in its what the truth is, and what responsibility anxiety . . . should attach to them is a matter which will have to be decided by this hon. House. SHRI BHUPESH GUPTA: And overflowing affection for Mr. T. T. Sir, Mr. T. T. Krishnamachari has played Krishnamachari. the main and dominant role 4017 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4018 in this affair. To say that he was all the Finance Minister, in helping Mundhra. innocent, to say that the entire drama was The entire responsibility for this deal must be erected by Mr. Mundhra and Mr. H. M. borne by Mr. Krishnamachari, but the Patel is to deny the truth. It was Mr. T. T. execution of it has been carried out by Mr. H. Krishnamachari as Minister of Commerce M. Patel. In this execution Mr. Patel has and Industry who first wrote to the Finance overstepped his limits and he has acted Ministry about Mr. Mundhra. He warned the unwarrantedly. Finance Ministry that Mr. Mundhra was trying to build up an industrial empire by Sir. in this context I would like resorting to all sorts of methods which were to tell this House that the conduct questionable and that the Government rules of civil servants in India should think in terms of taking some action should be reviewed. Governments against him when such deals were taking ".ome and go. Mr. Nehru may be place under the very nose of the here as Prime Minister today. To Government. That was the opinion held by morrow some other person, might Mr. Krishnamachari as Minister of come, but the civil servants______Commerce and Industry about him. What AN HON. MEMBER: You might be Prime could have transpired for the change-over Minister one day. from that attitude which Mr. Krishnama- chari expressed about Mundhra to the one SHRI MULKA GOVINDA REDDY: Yes, I that followed.... might become Prime Minister. But if I become Prime Minister of India, I would not SHRI BHUPESH GUPTA: Contri- want my civil servants to obey me in bution to Congress funds. whatever I say. They should work within the four corners of the law. They should work SHRI MULKA GOVINDA REDDY: That under the Constitution, under the rules and is the main crux of the problem. Sir, there is regulations that have been laid down. no doubt that Mr. Krishnamachari had full {Interruption.) In this respect Mr. H. M. Patel knowledge of the antecedents and the ways has overstepped his limits. He has gone out of of Mr. Mundhra; still he considered it his his way in trying to carry out the orders and duty to help Mr. Mundhra. But he tries to wishes of the Finance Minister. He has pose himself as an innocent actor in this executed the plan in a masterly way, the plan drama. He tries to tell the public that he had to rehabilitate Mr. Mundhra in his crisis. no idea of helping Mr. Mundhra but all the Sir, the Minister in charge of this subject is same was working for that Mundhra deal. not here. I would like to draw your attention to this.

Sir, we know it for certain that Mr. Patel THE VICE CHAIRMAN (SHRI AKBAR ALI has done a very good job as Secretary KHAN) : The Deputy Minister is taking notes. concerned with matters arising out of the partition of India and Pakistan. He is one of SHRI BHUPESH GUPTA: She is holding the ablest I.C.S. Secretaries who could do the baby. anything that is entrusted to them with DR. H. N. KUNZRU: She was not aware masterly perfection, and with that ability, that she was holding the baby. with that capability he has discharged his duty, not his duty proper, for he has carried SHRI MULKA GOVINDA REDDY: Sir, out the orders of the Finance Minister, not Mr. Kamat's part is another important factor written orders but the oral orders of in this drama. What is his part? It is true that he took over charge of the Chairmanship of the Life Insurance Corporation on 4019 kife Insurance [ RAJYA SABHA ] Corporation Inquiry 4020 [Shri Mulka Govinda Reddy.] 5th June, Mr. Mundhra had met him and he must have that is, twenty days before this transaction given his consent and must have told Mr. took place. He was overpowered by the all- Patel that 'it is our desire and it is our wish to powerful Mr. Patel, and added to this the rehabilitate Mr. Mundhra.' presence of Mr. Bhattacharyya and Mr. Iengar unnerved Mr. Kamat and he abdicated his SHRI P. D. HIMATSINGKA: He has not authority as Chairman of the L.I.C. When said so. once the deal had taken place, the deal to invest in Mundhra shares was agreed upon, SHRI MULKA GOVINDA REDDY: But the fixing of prices and other things was that was the reason why Mr. Patel carried out by Mr. Kamat and Mr. Vaidya- scrupulously executed the wish of his master. nathan. There they have bungled; but their bungling is mainly on account of the fear that AN HON. MEMBER: All surmises. they felt for Mr. Patel. SHRI MULKA GOVINDA REDDY: It is not a surmise; it is an inference that can be THE VICE-CHAIRMAN (SHRI AKBAR ALI drawn by any dispassionate person who reads KHAN) : You have only two minutes more. through these reports of the Commission. Why did Mr. Krishnamachari take the trouble SHRI MULKA GOVINDA REDDY: Mr. of helping Mr. Mundhra against whom he Iengari the Chairman of the Reserve Bank, himself had written to the Finance Ministry? who was all along present, had direct The answer has been provided in the Vivian knowledge of this thing, and in one of his Bose Board's Report—the assistance theory, depositions he has stated that when Mr. the theory that Rs. 2J lakhs were paid to the Mundhra wanted to see him, he threw him out Congress funds. of the house. Next day on the very application of Mr. Mundhra, he has written that the SHRI D. A. MIRZA: Is the hon matter would be looked into by the L.I.C, Member aware of the fact that Rs. authorities. That means that he was in full 5,000 were given to the Socialist Party? knowledge of the things that were happening. What happened to that? Unfortunately, most of these actors in this drama have not told the truth. It is really a SHRI MULKA GOVINDA REDDY: Yes. tragedy that these highly placed officers have not given out the truth. They tried to save One and a half lakh of rupees were paid to themselves and tried to save some other the All India Congress organisation. That is persons concerned with this drama. Sir, it is the main reason why that theory is said that Mr. Krishnamachari did not permit propounded to exonerate, to tell the world that the investment of the Life Insurance Cor- Mr. Krishnamachari was honest. This is the poration's funds in this deal, in Mundhra main reason; this is the motive force behind shares. He only said that the matter might be the whole affair. That should be looked into. I looked into. When Mr. H. M. Patel apprised would, therefore, urge that a public him of this deal, he said that the matter might commission— a high-power public be looked into. It is not so simple and commission— should be appointed to go into innocent a term; it means that he had a full the misdeeds of the Government of India and discussion with Mr. Patel though that has not the State Governments. Recently, the West been disclosed here, but it can be rightly in- Bengal Communist Party has made ferred that he had discussions with Mr. Patel allegations . . . and also with Mr. Mundhra; DR. W. S. BARLINGAY: What about the results of the Commission? 4021 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4022

SHRI MULKA GOVINDA REDDY: . . . as This, I think, is a wrong conception and a to how the funds have been misused by the wrong presumption. It is possible that the State Government of West Bengal. Recently case might have shaped itself in such a way certain allegations have been made that the that the innocence of one would have been in- Government funds in U.P. have been misused compatible with the innocence of other; but it by the U.P. Government in giving loans to has shaped in a different way. industrial concerns, to big businessmen. I would, therefore, urge that a full-fledged Sir, so far as the conduct of Mr. public commission—a judicial commission— Krishnamachari is concerned, the Chagla should be appointed to go into the misdeeds, Commission has said that his constitutional into these financial deeds, which the responsibility was there, .and then it said that governments have committed in giving in a certain measure his factual responsibiity money to big industrial concerns. Otherwise, was also there. The Chagla Commission was the funds of the public will not be safe in the of the view that the civil servants concerned hands of the Government, and if they have were responsible for the deal which in the any sense of responsibility to the country, if opinion of Mr. Chagla was neither business- they have any sense of understanding the like nor prudent nor proper. The Bose Board situation, the pulse, of the country, the went into the guilt of the officers. It did not Government should resign. It is not enough to go into the guilt or innocence of Mr. say that 'we have made Mr. Krishnamachari Krishnamachari and, therefore, whatever resign.' observations it has made in respect of Mr. Krishnamachari are incidental, and are not Thank you. enough to fasten the guilt on him. Then we come to the Report of the U.P.S.C. The U.P.S.C, went into the facts as they were put SHRI B. K. P. SINHA: Sir, while rising to before Mr. Chagla and Mr. Justice Bose. But address this House, I am reminded of the wise then they had something more before them counsel that Diwan Chaman Lall gave that we and on the basis of that evidence, they should not treat this House as the last court of absolved the officers of any guilt, for it was facts. It shall.be my endeavour to respect his their considered view that the transaction was advice in a greater measure than he himself neither unbusinesslike nor imprudent nor did, for after giving this advice, he wanted to improper and there was no question of any treat this House as the last court of facts. mala fide involved in it. In the light of these findings, they absolved the officers. Now, Sir, Sir, the great debate which has made Mr. if the transaction is a proper one, if it is not Mundhra an all-India figure, which has cost unbusinessmanlike, df it is not imprudent and this country an able Finance Minister, is now then even if we accept the view that Mr. coming to an end. But this great debate has Krishnamachari gave his full approval to the been oppressed by certain very grave whole transaction, I do not see how he can be misconceptions. One of them has been that as blamed or held guilty, if the officers are not between the Minister and the civil servants guilty on the same facts. Nobody can say that there is ,an antithesis. Their cases are an Mr. Krishnamachari is guilty. If the officers antithesis of each other; their cases are not are innocent, Mr. Krishnamachari is also compatible with innocence of both. The innocent, and rightly so. But the more innocence of the officer is not compatible important question is what the Government with that of the Minister. The guilt of the should have done in th* circumstances of this officer is not compatible with the guilt of the case. Minister. 4023 Life Insurance [ RAJYA SABHA ] Corporation Inquiry . 4024 [Shri B. K. P. Sinha.] There has been tution lays down that the cases ot servicemen Report of the Chagla Commission; thereafter, shall go to the Union Public Service there has been the Report of the Bose Board. Commission. Sir, human life is getting more Both of them held that the transactions . were and more complex, and the consequence of improper and unbusinesslike. But then the this complexity is that human life is getting matter had to go before the U.P.S.C, for the more and more compartmentalised and Constitution enjoins it, the disciplinary rules departmentalised. Now the profession that a of the serviee enjoin it and, therefore, this man pursues, the work that he does, they obligation cast under the Constitution could impart a certain psychology to a man. A judge not be set aside and the matter had to go has a different psychology; an advocate has a before them. When the matter went before different psychology; an administrator has a them, the issue was before them; the evidence different psychology because they work in was before them, and in the light of their different conditions. An officer of the Govern- findings, they came to certain conclusions. I ment has to take decisions and take decisions think it was extremely proper on the part of rapidly. What has a judge to do? A judge has the Government to accept that finding and to interpret the law. A judge has his eyes on that recommendation of the U.P.S.C. the past. The administrator has his eyes on the future. Therefore the impulses that rule them and the psychology that they have are different Now, Sir, we seem to be obsessed by the and so the Constitution rightly and wisely lays fact that before the Report of the U.P.S.C, down that a matter concerning servicemen there had been two judicial findings. But then the Constitution itself says that there shall be shall be finally decided upon—of course, in a consultative capacity—by the Union Public no finality at that stage in such matters Service Commission. Sir, in the Middle Ages because the Constitution lays down that the there were guilds of men. Even now you see final authority— the consultative authority— that an advocate has to be judged only by his in this respect shall be the Union Public compeers, by fellow advocates of the Bar Service Commission. Then there is a further article in the Constitution which says that if Council. There are such good provisions in other cases also. in any event the Government do not find it proper to accept the findings or the SHRI BHUPESH GUPTA: For any recommendations of the U.P.S.C, they will offence? have to give the reasons therefor. Therefore « the Constitution enjoins or contemplates that normally the recommendations of the Union SHRI B. K. P. SINHA: Therefore I feel that Public Service Commission shall be in this matter the opinion of the Union Public accepted, and that has been the consistent Service Commission, which consists of practice followed in this country, and experienced and seasoned administrators, is whenever this Government, rightly or of greater weight than the opinion of the two wrongly, have differed from the re- judicial bodies that went before them. commendations of the U.P.S.C, this House as well as the other House have tried to Then I would refer to one more matter. It condemn the Government severely for their seems that the Union Public Service divergence. I do not know why then we Commission was in possession of that should accept that in this case unless material or evidence which was not before the Government diverges from the Board and the Commission that preceded it. recommendations of the U.P.S.C, it would be It becomes clear from the acting unwisely and improperly. Our Consti- 4025 Life Insurance [ 11 SEP. 1959 J Corporation Inquiry 4026 last line, from the last portion on page 2, the Union Public Service Commission or of where the Government Resolution says: the Government, in the absence of the whole truth being disclosed, that these men should "All the proceedings before the Vivian not be held guilty, is correct. I feel, Sir, that Bose Board of Inquiry and the the Report has been rightly accepted by representations of the officers against Government. I feel that the officers are whom the Vivian Bose Board of Inquiry innocent. I feel that Mr. T. T. Krishnamachari had reported were made available to the is innocent. Union Public Service Commission. All other material" . . . SHRI P. D. HIMATSINGKA: Mr. Vice- Chairman, Sir, as has been mentioned by the previous speakers, this matter has passed, tnis I emphasise the words "All other material". Mundhra deal, as it is called, has passed through various enquiries. Justice Chagla did "All other material required by the the first enquiry. Then we had the Vivian Union Public Service Commission was Bose Board to go into it. Then we have the supplied to them." U.P.S.C, and the Government views, and tnere Therefore the materials that were before Mr. is the dissentient note of one of the Members Justice Vivian Bose were different from the oi the Union Public Service Commission. Sir, material that was before the Union Public I am not going into the merits, about Service Commission. The U.P.S.C, had the apportioning the blame of one and advantage of the explanation of the two exonerating the other. You will find, Sir, that officers and then . . . certain irrelevant matters have been introduc- ed in the discussion today when we are asked (.Time bell rings.) to consider the Report that is before us. Only a few minutes, Sir. -Since they were experienced ad- Sir, as you know, the insurance companies, ministrators, they called for more material, before they were nationalised, had been and therefore their decision is entitled to entering into deals or purchases of shares for greater respect and weight. the purpose of investment. As a matter of fact, that was one of the methods, one of the modes Lastly, Sir, I would refer to this. The three of investing their surplus funds outside, what bodies are unanimous in one respect that the was not being invested in Government whole truth has not been told. Now, Sir, if the Securities, and the L.I.C, after nationalisation, whole truth has not been told, can you hang a had been following the same method to some man, whether a Minister or a public servant, extent. Therefore, if the transactions were on the basis of an evidence which does not entered into bona fide and proper prices were disclose the whole truth? You, Mr. Vice- paid, there will be nothing to say against the Chairman, are a seasoned lawyer, and you deal even if the shares belonged to a particular know, Sir, that in such a contingency the person who may not have been in the good courts would not hang even a murderer, would books of the Government or of a particular not even impose a fine on him. Here, in this Minister. The major fault that has been found case the truth has not been told. Now there is with the transaction is that some of the shares no evidence that the truth has been suppressed are not such that should have been purchased, either by the Minister or by the officers and a little excess price appears to have been concerned. This may be due to the faulty paid, taking the basis of the current market investigation, but if the truth has not been rates at the time. Sir, whether Mr. T. T. told, then I plead that the stand of

4027 Life Insurance [ RAJYA SABHA, ] Corporation Inquiry 4028 [Shri P. D. Himatsingka.] Krisnnamacuan against them. If we do that, the result will be KU*.W auuut th. transactions or did not, if the that no officer will be prepared to take any oni,, fault be about excess price paid, wt: responsibility. As a matter of fact this was cannot hold him responsible, because he was pointed out in a circular that it is already the not the final authority who fixed the price; he position that they do not want to take any might have come to know of it later on. But responsibility. As was mentioned, there is the so far as the evidence that has been adduced idea that no decision should be arrived at or be.ore the inquiry bodies is concerned, you that a negative attitude should be there, as has will realise that different conclusions have been mentioned in the circular. The position been arrived at by the different authorities. On will threfore be that none of the officers will the basis of the same evidence that was before be prepared to come to any decision or take Mr. Justice Chagla and what was before Mr. any responsibility for a decision and Justice Bose and his Board they come to everybody will try to pass on the work to his certain conclusions. On the same materials the superior officer for decision. The result will Members of the U.P.S.C, have come to be chaos. None of the works will be done in a practically contrary decisions so far as the proper manner. Therefore we must look into it officers are concerned, and they have from the point of view of how best certain recommended that no blame attaches to Mr. principles can be laid down which will be H. M. Patel. there to guide the officers and which will be looked into and no unnecessary fuss should be created simply because some mistakes have Sir, I want to say that Government has been been committed by an officer, unless, as I going in more and more for State enterprises. said, we can show dishonest intentions or More and more enterprises are being improper motives or personal gain of the nationalised or new enterprises being started officer concerned. by the Government. So, you will require more and more officers to look after them, to manage them and to see to the interests of the As you will find, this question was raised Government in respect of their investments. If by hon. Shri Feroze Gandhi. It was he who the officers have not got the liberty or the started and in fact in the beginning he tried to freedom to act as circumstances may require blame the hon. Finance Minister as he then at any time, it. will be almost impossible to was. Now he has changed his opinion. manage these undertakings or these Therefore you will find that it is very difficult institutions. Therefore, simply because an to come to a definite conclusion on facts, officer makes a mistake, we should not try to unless all the facts are properly sifted or hang him unless he has done it dishonestly or placed before you. Therefore in a matter like very negligently, or gross negligence is found this, what I feel is that a good deal of freedom or some motive behind the act, which is should be allowed to officers to act honestly improper, can be suggested. So far as the and they should not be called upon to explain present transactions are concerned, Sir, none their conduct simply because the matter is of the inquiry bodies, neither Mr. Justice raised in Parliament. When a question is Chagla nor Mr. Justice Vivian Bose nor the raised in either House, it becomes very impor- U.P.S.C, none of them have suggested that tant and everybody begins to think that there there was any improper motive or that there is something shady tho moment a question is was any dishonest intention in the mind of any raised here. Whether there is something wrong of the officers or the Minister concerned and, or not in the transaction, one begins to look at therefore, to my mind, it is very improper to it with suspicion and that i« what has try and condemn the officers, or to take any happened in many cases. Therefore my action suggestion is that in a 4029 Life Insurance [ 11 SEP. 1959 J Corporation Inquiry 4030 matter like this, we should not tak any action DR. SHRIMATI SEETA PARMANAND: I against an officer uni--his guilt is proved would like to point out that there is nothing to and in this ca on the basis of the fight with the word. I go to the spirit of what recommendatk and advice of the U.P.S.C. I he said. You may call it appellate court or not think i is the duty of the Government to exc but this House should be the final authority nerate Mr. Patel and Mr. Kamat. Bot.. of them and what is final is called appellate in my have been very able officers, have a good opinion. It way said that this case should not record of service as ha been admitted by the be pleaded like a brief. As has already been Government i se.f and it will be a very wrong pointed out by hon. Mr. Sinha, if Mr. Chaman ste; to create a feeling in the minds of th. Lall did not argue this case like a lawyer officers that even if they make ar honest taking up a brief, then I should like to know mistake, they can be held up t censure, or that what the meaning of a brief is. I am thankful they can be proceed ed against, or even to Mr. Shiva Rao for having brought this dismissed. There fore it is up to us to see that matter before the House because, in my the off. cers have courage to come to opinion, the Government itself should have decision" to decide matters and that brought the Resolution for consideration of the simply do not pass them on to others. the House. After all the criticism that was showered on this particular thing and the way in which, to begin with, a public enquiry was held while it should never have been a public THE VICE-CHAIRMAN (SHRI AKBAR ALI enquiry, it was very essential that the finale of KHAN) : Dr. Seeta Parmanand. You will the thing, that is the Resolution on this by have only 10 minutes. Government, should have been put be Lore the House. My point in speaking is purely from the administrative standards which I DR. SHRIMATI SEETA PARMANAND have felt and the point which has been made (Madhya Pradesh): Thank you, Mr. Vice- by one or two speakers, namely, the effect of Chairman, for calling me to speak after all the whole affair on the morale of the services. this time. I would not like to go into the We bring various Applebys here, we get them details of the report and the various observa- to review the procedure and administration tions made by the three committees and and what happens to their reports? I wonder commissions or Boards because much has what Mr. Appleby would have said about the been said about it already and within the treatment given to the civil servants after this. limited time I would like to dwell on other Even after the report of the U.P.S.C, they rely points which in my opinion are more only, if I may point out, on the Minute of fundamental to the issue than what the Dissent. I would refer to paragraph 11 of the Commission said or the Board said. Resolution where it says: "Government have given full con- sideration to the matter on the advice of the To begin with I would however like to refer Union Public Service Commission and to what was said by Diwan Chaman Lall have also considered the minute of dissent, because I have not been able to understand of Shri J. Sivashunmugam Pillai. Whilst what objection he could have to this House Government feel that there is some force in being more or less a final authority or the the minute of dissent in regard to the views of this House being final and that is criticism of Shri Patel, in view of the long what it really should be. and distinguished record of Shri Patel in service,

THE VICE-CHAIRMAN (SHRI AKBAR ALI KHAN) : He said 'not the appellate court*. 4031 Life Insurance [' RAJYA SABHA J Corporation Inquiry 4032 [Dr. Shrimati Seeta Parmanand.] I lacking in the conduct of Mr. Patel? I the complicated post-budget economic Maybe, an error of judgment. May-| be, as situation in 1957, the absence of any mala in business, it is necessary to take decisions fides and the weight which according to expeditiously about certain monetary convention, attaches to the advice of the transactions as is done by hundreds of Union Public Service Commission in such people in hundreds of business concerns. matters, the Government of India have We cannot expect to enter into the public decided to drop the charges against him." sector and not give that authority and that right to come to quick judgment to an officer and hang him, so to say, when he goes wrong. In my opinion, after all that long What would you have done if it had paragraph, it was never .adequate only to drop come out correct? You would not have the charge against him but leave it open to gone out of your way to give a golden him whether he would like to join and I am' crown to the officer. (Time bell rings). almost certain that no man with self-respect I have just taken seven minutes only. would have liked to join but all the same, the If it is necessary to develop our public right thing for the Government would have sector we have to train the personnel in been to leave the option to him. I am pointing business methods who can take charge of this out more from the point ol view of them. When officers are not-willing to take administrative standards. It is known up the responsibility that is thrown upon them, everywhere that standards of upright it is necessary for us to emulate the behaviour in public administration are fast example of England and the Ministers falling. In the States also we find that it is not should take the responsibility. We can so much on ability and efficiency an officer give a warning and guidance for future depends for promotion as on dancing action and leave the men to be wiser in the attendance on Ministers. If the uprightness future. of public servants is to be upheld, we have to see that, as was pointed out by Dr. Kunzru, as I would like to give a few instances before 1 in the Western countries like England, sit down. The integrity and unity of these they are given all opportunities for defending services and their morale have already themselves. We find that this way of broken down. As an example I would like to treating our public servants in a manner point out that Mr. Patel who was a member without looking to their sense of self-respect, of the Executive of the Institute of Public to their integrity of services, is becoming Administration did not get any support from so common that we are criticising our all the service associations of which he officers not only in the highest civil services, was a president, though they should have administrative services, but we are exposing passed a resolution standing by him. When them to the effects of their action which may this matter was mentioned to some of the have been taken with all bona fides. This highest members of the services, who are no happens also in the Defence Services. longer in service, they said, they pleaded that We are very often going to the extent of in these days nobody likes to risk his own criticising our Public Service Commission future. Is that the kind of morale that we people. As was pointed out, if the services want in our public services? I feel that in are to be there with the highest efficiency— view of what has happened, we need not Ministers may come and Ministers may go, have stood so much by the Minister who being Governments may come and Governments a Member of the Lok Sabha could have mav ?o—we have to see that they feel that explained his own position. Within the ther? is perfect guarantee of justice to them. I limited time at my disposal I do not want to go would like to point out this. What is it that into the right and wrong of the situation. But was found in a country where 4033 Life Insurance [11 SEP. 1959 ] Corporation Inquiry 4034 standards of administration have to be kept Finance Minister, his dear friend, in Madras, high, it is necessary to see that the services when unveiling his portrait. Then we had the are given an excellent sense of security and Prime Minister almost bursting into tears justice and fairplay. Thank you. whenever he remembered that dear name. Then we had the Prime Minister making certain rather derogatory remarks about THE VICE-CHAIRMAN (SHRI AKBAR ALI Justice Vivian Bose, for wliich he expressed KHAN) : Mr. Lingam. You may take about seven to eight minutes. public regret after the Calcutta Bar Association had passed a resolution condemning the Prime Minister's action. This SHRI N. M. LINGAM: Then I do not is how things began to move. propose to speak. I want at least fifteen minutes. I would like to point out right at the beginning that there has been a lot of THE VICE-CHAIRMAN (SHRI AKBAR ALI conditioning inside the Congress Party so that KHAN): Not fifteen minues but at the most whatever may or may not happen, the former you may take ten minutes. Financt Minister, Shri Krishnamachari, is to be saved and rehabilitated. We hear there is talk SHRI N. M. LINGAM: Sir, I decline to about his coming to the Commerce and speak. Industry Ministry, if not as the Vice-Chairman ox the Planning Commission and so on. And THE VICE-CHAIRMAN (SHRI AKBAR ALI of course, Mr, T. T. Krishnamachari is the KHAN) : Mr. Bhupesh Gupta. author of this or that pamphlet setting out his case, although he had an opportunity in the SHRI BHUPESH GUPTA: You could have House to get up and explain his position and given the hon. Member a little more time. the whole matter. Anyway, we do not like the look of things. Public morale is not served by Mr. Vice-Chairman, with this this kind of methods and that is what I would debate, I think as far as Parliament like to say,' that standards are not upheld by is concerned, the curtain will have procedures of this kind and by this kind of hung down on one of the biggest behaviour on the part of the Government scandals in our country, namely the whose responsibility it is to uphold public LIC-Mundhra scandal. But this standards in our public life. Somehow or the scandal will always be there as a reminder to other the love of Krishnamachari grew more the nation of the corruption in high places and than their concern for finding the truth in this the collusion between the big-business on the matter and naturally truths have not been said. one hand and high officials and Ministers on the other. Therefore, the controversy, if you Now, take this case here, the Mun-dhra call it a controversy, will not subside with the LIC Deal. It is not as if Mr. Haridas Mundhra discussions here, because the public in the suddenly appeared at the counter of the LIC coun-, try have taken a keen interest in the with a pistol in his hand like a bandit and matter and they have been thoroughly over-awed the people and ran away with the disappointed by the manner in which the money. Nothing of the kind. He went before Government has handled the whole episode the LIC or appeared there as the patron of the since the publication of the Chagla Congress Party. He, only a few months ago, Commission's Report. had donated Rs. 2.5 lakhs to the Congress [MR. DEPUTY CHAIRMAN in the Chair.] election funds and he expected a

Sir, as you know when the matter was under consideration by the Bose Board, the Home Minister was paying fulsome tributes to the former 4035 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4036 [Shri Bhupesh Gupta.] quid pro quo. WeL, are responsible? That is the question. Then I do not know what he said, but he went with there are the bigger questions, namely, the optimism because he had given money to the relation between the Minister and the officers, Congress and when this Faithful went to the relation with Parliament and the Public LIC for funds, he got more than he asked ior. Service and so on. I shall come to them later There was competition amongst the officials on. We have got before us two sets of people as to how quickly and how fast and how in this matter—the non-official side and the generously this flamboyant person in the official side. On the non-official side there are industrial world could be obliged. And you Mr. Sodhani, Mr. Chaturvedi and Mr. see he got the money. Here is what Mr. Mundhra with a few others holding the rear. I Mundhra himself said. The Bose Report says: don't know all the others, but these three stars appear on the horizon in the context of the "In the end Mr. Mundhra said almost deal. On the official side we have a galaxy of triumphantly, 'Whatever the meaning is, the officers and men. To begin with, we have Mr. upshot was that I got more than I had asked T T. Krishnamachari, the then Finance for'." Minister, his Principal Finance Secretary, Mr. Then there is another reference: H. M. Patel, and then Mr. Kamat, the Chairman of the LIC, then Mr. Vaidyanathan, 'He began by asking for Rs. 18 lakhs the Managing Director, and Mr. P. C. Bhatta- under these heads on 21si June, 1957, charyya, Chairman of the State Bank of India, increased it to Ra 94,74,000 on the 23rd and Mr. Iengar, Governor of the Reserve and ended by being paid over Rs. Bank. Well, this is the collection. You will 1,26,85,715.' find that 4 p M Mr. Iengar, Mr. P. C. Bhatta- charya and Mr. H. M. Patel from more or less Let us now see how these things hap pened. the team in Mr. Krishnamachari's empire. If We talk of rope tricks, but we do not believe Mr. Mundhra had built an empire in the in rope tricks in such public matters. Tell us industrial field, Mr. Krishnamachari also what is the magic in it. When I read the succeeded in building an empire in the Government's Report, 1 thanked the ministerial field. Now Sir, the three Government that they had not said that the musketeers in his sup port, Mr. Iengar, Mr. Mundhra deal was an act of God. That I could Patel and Mr. Bhattacharyya, worked together have understood and if they had called it an but when they appeared before the tribunal act of God, we could do nothing about it. and faced searching enquiries, we find a sorry Nobody will question it, for nobody questions spectacle. The Report itself says: an act of God. But I believe the hon Members opposite on the Treasury Benches do not yet "But now we come to a saddening claim divinity and they do not therefore like spectacle. We find some of the highest to describe it as an act of God. officials in the land shirking responsibility and hiding tht truth. We find each trying to Now, that money comes into Mr. wash his hands of a matter that has evoked Mundhra's hands. He gave two and a half much public criticism and each trying to lakhs and got a crore and more, a good throw the blame on the Other. A Minister bargain for a young man, you may say. What, blames his Principal Finance Secretary; the about the officers? Who are these people? Secretary blames the Minister and a col- Nobody now questions the deal and league who holds a high office; the everybody says it is a dirty deal and colleague shi'ts the onus to a coworker, the everybody is shocked. I do not think there i= Managing Director of a anyone who thinks otherwise. There may be one or two, I don't know. But how did the deal come about? Who 4037 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4038 large national institution in which both many other people. I am glad that Mr. Vivian hold high and responsible office; and the Bose told the truth, at least found the thing Managing Director, in turn, blames each of out. the others." I now come to the nature of the This is what we find. Tha happy family is transactions. I said that various people were broken up before the searching enquiry and involved in it. It is not necessary to they start throwing the blame on each other. reconstruct the whole thing but take the June The result is that truth could not be got deal. I am not concerned with the others. The because some of them told half-truths, others venue of the crime, I would say 'conspiracy,' did not, tell the truth at all and some of them has to be found out, Calcutta, Delhi, Bombay had even told falsehood, as the Commission and Delhi again. Now, start with Delhi, June itself says. This is something which should be 12 and 13, 1957. Mr. Sodhani, Mundhra's taken serious note of. After all, they are dear friend and agent and go-getter, met Mr. Judges and they have experience oi dealing Patel here. That is an admitted fact. In^this with such matters as these and they say that connection there was referrence to certain the truth had not been told at all. They then books at the Secretariat which keeps the arrive at the conclusion, having heard half- records of interviews. I gave notice of a question following the publication of the truths) fa'sehoods and various other things, that accommodation was made, that is to say, Vivian Bose Report. The question was: a loan was advanced to Mr. Mundhra, not for relieving the drag on the market, the stock ex- "Whether any enquiry was made into the change which in itself would have been bad if loss of gate registers at the North Block of they had done it, but for helping Mr. the Central Secretariat in New Delhi from Mundhra, Mr. Mundhra, the patron of the June 6 to June 17, 1957, referred to in the Congress organisation, the benefactor of the report of the Vivian Bose Board of Inqu U.P. Congress and the Congress of my State. ry?" That is the position. Now, the U.P.S.C, has The answer was: rejected this theory, saying that there could not have been any motives. The Prime "The matter was examined. No Minister is allergic about it. I should have importance is attached to these registers as thought that the Prime Minister would show a they are not long-term and permanent little more patience when he takes money records but are merely papers of an from such people to run the elections. He was ephemeral character." al'ergic about this and he made certain remarks. People did not understand it but Mr. They have admitted that they have Mundhra understands this all right, people disappeared whether they are of an ephemeral like him understand this all right, that if you character or not but they are very relevant and pay money to the Congress Party, in other important now because those registers would words, if you pay a piper today, tomorrow have proved the interviews that took place in when your chance comes, you can call the that period between Mundhra and his men on tune as well. That is how they do, the Tatas, the one hand and the high people in the the Birlas and everybody. They give money to Secretariat on the other. This was the Congress Party. What for? What altruistic disappearance by design; it was not just an reason is there? There is no altruistic reason accident. Then, Sir, come to Calcutta. All whatever. The Congress Party is in distress these jewels of the administration, Shri T. T. and they have to hep it in the elections. Mr. Krishnamachari, Shri P. C. Bhattacharya, Shri Mundhra is a clever man, cleverer than Iengar and Shri H. M. Patel, they all meet together and have discussions with big businessmen there. That is admitted in the report. Mr. Chaturvedi, 4039 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4040 [Shri Bhupesh Gupta.] President of the charyya. Could you believe it? I wonder why Stock Exchange and a very dear friend of a copy was not sent to me. Sometimes, I do Mundhra was always in the picture, all the get copies of very many letters sent to me. time talking in the meeting, arguing with They were sent to them. It is a surprising way them. What passed on there in the meeting, I of functioning. Therefore, the trio comes into do not know. There was a rumour at that time the picture, the same trio as I mentioned, Mr. that Shri T. T. Krishnamachari had also met Patel, Mr. Iengar and Mr. Bhattacharyya. Mundhra. Now, I do not know what the Chief They are in the picture and each one of them Minister of West Bengal would have said, if has a letter of Mr. Mundhra in his pocket he had been called as a witness in connection carrying the same message, after Mr. Mundhra with this and I would not say anything beyond had met Mr. Patel. What are we to conclude that. It is good sometimes to give credence to from it? Well, do I require to go through a rumour. Anyway, Mundhra is not supposed to thousand pages of evidence to understand this have met the Finance Minister but Mr. simple thing that they were all working Chaturvedi met all these people. The scene together to a common end? It is obvious that now shifts to Bombay where, on the morning there was something. It was done as a sequel of the 21st, Mundhra arrives by the night to something else. The sequel was, in Calcutta plane. Then comes the Finance Minister. Both something had been done and this was a of them are together in Bombay. I do not follow-on operation here in Bombay. People know why Mundhra did not take the same are trying to collect evidence from here and plane, the morning plane; if he had done that, there and crossing the 't's and dotting the 'i's in he would have had good company, the order to arrive at the truth. Is all that necessary company of the Finance Minister and both here? You know how people behaved. On the Would have arrived together, but then they are 21st the letter was there and on the 22nd they wise in such matters and, therefore, they went had the meeting. I know how difficult it is for separately. What happened in Bombay is the representatives of a trade union delegation again very interesting. Hardly has Mundhra to meet a Minister. There will have to be 25 arrived in Bombay, he rushes to see Mr. H. M. telephone calls and they have to wait for five Patel. There must be some gravitational pull, days before they cou'd even meet a Deputy pull of affection or pull of something, I do not Minister. Here Mr. Mundhra comes to know which. I do not go to a place and Bombay and starts his operation and the entire immediately rush to see a man, even if he is machinery works under his spell with utmost the m'ost affectionate friend. It is not done expedition. On the 22nd all these gentlemen unless and until the pull is very great. People meet and they discuss what? They discuss Mr. take a little time to have their bath, to have a Mundhra's problem. The country's problems little rest, do a little telephoning and all that are forgotten; the directive is forgotten. Mr. and then only they meet the people on Mundhra's problems are discussed and business, but this was not done. After arriving, immediately settled. Somebody took a note, I he meets Mr. H. M. Patel. Then letters go, not am told. And immediately Mr. T. T. to the Chairman, Mr. Kamat, but to Mr. H. M. Krishnamachari, the Finance Minister, said, Patel, about his (Mundhra's financial 'look into it.' Immediately the conclusion was difficulties and so on and copies are sent, not that sanction had been obtained and sanction to Mr. Kamat, the Chairman of the Life was given and then of course the machinery Insurance Corporation, who is the most moves and the whole thing is settled in a relevant person concerned with the Life matter of three to four days. Can anyone of Insurance Corporation, but to Mr. Iengar and you, I ask, get Rs. 10 from Govern- Mr. P. C. Bhatta- 4041 Life Insurance I 11 SEP. 1959 ] Corporation Inquiry 4042 ment for a relief organisation in so short a dhra fascinated him; something in Mundhra time and in such a manner? I ask the attracted him; something in Mundhra set even Congress backbenchers. If you are running a Mr. Krishnamachari ultimately in motion and relief organisation anywhere, go to the therefore he said, 'look into it.' And then the Ministers and see how long it takes to get machinery moved and it went on. Therefore anything from them. But here it was done in this term 'look into it' should not be no time. All these gentlemen were under the interpreted in the manner it was sought to be supreme spell of the beloved person called done. It was a consent. Consent was given to Haridas Mundhra. The rising star had risen so Mr. Patel. Mr. Patel knew the mind of the high that all of them were bewitched and Finance Minister and the Finance Minister were dancing to his tune. Let us not mince knew the mind of his Principal Finance matters and see how this transaction has been Secretary. There was a communi'on between done. them. Lovers do not talk very much. They understand each other. They look at each Now, we come to Mr. T. T. Krish- other and they can understand very well. It namachari's part. Now I do not believe he was was not necessary for them to talk very much, innocent. Mr. Feroze Gandhi has evolved a to deliver discourses on investments and other school of thought and according to him Mr. T. things. They knew each other. Their eyes T. Krishnamachari is absolutely innocent. Mr. spoke; mannerisms spoke. Language was Shiva Rao belongs to another school of brief: the spoken words m-ay be brief, but all thought and according to him Mr. Patel is the same, the job was done. God's own son. I belong to none of these schools of thought. They are all guilty. They 'SHRI LAV JI LAKHAMSHI: Love is are all in collusion and it is difficult for me to bourgeois luxury. How do you know about apportion blame individually. The Chagla it? Commission said that Mr. Krishnamachari was not only constitutionally responsible but SHRI BHUPESH GUPTA: Because I have factual res-, ponsibility has also been attached seen you loving some people. That is the to him. Let us see how he behaved in this position. Now, my esteemed friend, Mr. Feroze matter. We are told that Mr. Krishnamachari is Gandhi, delivered a one-hour lecture on the a very very sensitive person. He was a subject to prove that Mr. T. T. Krishnamachari talkative person as we have kn'own him. He was not at fault. It is an amazing piece of thing used to answer supplementaries by long that he did. I am very sorry for him because he is lectures. He is supposed to be a man of very otherwise an able person. But then, may be the high intellect. But having known Mr. Mundhra political need of the Congress party is there and in 1956, that there was something he is a loyal congressman. Then what happened? objectionable about him and that his shares In 1956 Mr. T. T. Krishnamachari himself was should not be touched and so on, he says, 'look saying something against Mr. • Mundhra, that into it.' Well, I ask this. If an application is his shares should not be touched and so on. made to the Minister of Finance for an There was a direction about L. I. C. investments appointment by a person against whom there is that the sanction of the Investment Committee some suspicion of his being a Communist, shou'd be taken. It had been violated by Mr. Will he entertain his application in this Krishnamachari and he never remembered it manner? Never; he will ask for a police report; when the proposal was made to him about in- he will ask for Home Ministry's report and so vesting a crore and a half rupees in Mundhra on. Here this is a question of Mr. Mundhra and concerns. Am I to understand that Mr. he says, 'look into it.' I say his reaction was Krishnamachari's favourable. Something in Mun- 4043 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4044 [Shri Bhupesh Gupta.] memory is so weak question before the nation today. Apart from that he forgot it? He does not forget; he is a other considerations, it is an important very clever man. Whatever else you may or question. Therefore, Sir, let there be no may not say about him, you can certainly say mistake that Mr. Krishnamachari's he is a very intelligent person. His memory is responsibility is there constitutionally and also fairly strong. But then since it was Mr. factually and there is no escape from it. Now, Mundhra, accommodation had to be made and some peop'e thought that if they could get the transaction took place. Then the matter somehow Mr. Patel, as he should be got, then came up in Parliament but he never owned up. probably Mr. Krishnamachari could escape. All the time by action he condoned it. Mr. That was not possible. The Union Public Krishnamachari, Mr. Satya Narayan Sinha's Service Commission went into it. It is an friend, condoned the action of the L.I.C. He amazing thing that the Union Public Service had an opportunity in August to repudiate it in Commission exceeded its authority under the the Lok Sabha and then in December in the Constitution. Sir, from the findings of the two course of the debate. He never did it. bodies consisting of Judges, the function of Therefore I do maintain that Mr. the U.P.S.C, was to recommend in the light of Krishnamachari knew the antecedents of Mr. the findings as to what punishment should be Mundhra and even then he endorsed the trans- awarded. It was none of their business to action and having known that the transaction reopen the whole thing and make had taken place, he did not say anything observations as if they were the Judges. I against it. Imagine what would have happened would like to know when the Constitution if it was a small fry in the Civil Service, not gave such powers to the U.P.S.C. Mr. Patel, but some small Assistant; he would have been sacked under article 311 or some But then for some needs of the higher-ups such thing would have been invoked to fire the U.P.S.C, had to function in this manner. I him straightway. Nobody would have gone to am sorry to say that by this behaviour the unveil his portrait. Therefore do not think that U.P.S.C, has compromised its position and Mr. Krishnamachari has become a martyr to has invited some kind of very strong and our Constitutional decorum. It would be a justified criticism on the part of the public. profound error and it would be, if I may say so, misleading ourselves if we think that Mr. SHRI B. K. P. SINHA: I would request the Krishnamachari became just a willing martyr hon. Member, to read the relevant article of so that our abstract constitutional principle the Constitution regarding the U.P.S.C. He is may be upheld. He was involved in it and it a Barris-ter-at-law and he can interpret it. happened like that.

Then a point has been rightly mentioned SHRI BHUPESH GUPTA: I agree that I that he never repudiated it. Now if our have passed that examination once, but I Finance Ministers do not properly look into thought that he is a practising lawyer and he this kind of transactions involving Rs. \\ should know the article better. Now, that is crores and if after the transaction even when the position. This is how it took place. Mr. H. questions are asked in Parliament they do not M. Patel has been exonerated practically. The wake up and show vigilance, are we to retain charges have been dropped. Why? He went them as Finance Ministers or are we to take through distress. People are arrested, leaders them somewhere as something else, as Vice- of the Opposition are arrested and detained Chairman of the Planning Commission or in under the Preventive Detention Act and when some other Ministry? That is the I lead a deputation to the Home Ministry, it does not look into 4045 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4046 the cases. Ask Mr. Datar. He is there. But Mr. SHRI BHUPESH GUPTA: Well, if my Patel was in distress, because the gentleman Party comes into power, there will not be so had to face an enquiry for two months, and farcical a treatment of such a scandalous the hearts of the Home Minister and the deal. We know how to deal with that. Now, Minister of 'State began to bleed. Therefore, Sir, why deal with Mundhra? Mr. Haridas there was no punishment and that these Mundhra, had he not been caught, some day .charges should be dropped. As for Mr. he would have been given the "Padma Kamat, I think that this gentleman may be a Bhushan". He would have qualified for it very affable person, but he does not show any somehow. I am saying this because his competence in him. He functioned in this deal path-finders have been treated with extreme as being somewhat overawed and naturally he kindness, awarded honours and all the time did not discharge his constitutional and being worshipped by the ruling Party. administrative responsibility, and he has been censured. Where are we now? The only person in trouble is Mr. Mundhra. If you like, withdraw the cases against him. Why trouble Now, about the relation between that fellow? He fooled you all, then got away Ministers and the officers. Yes, that is an with the money, and then why trouble him? important question. Now, even on that score He is in a hundred cases. In some of them he Mr. T. T. Krishnamachari has miserably has been exonerated and some of them are failed. Let there be no mistake about it. He waiting to be decided. At least -one of the did not behave pToperly in relation to his guilty persons is on his toe waiting to be officers. He did not exercise the direction, called to Delhi to assume some great superintendence and vigilance that is responsibility. Is that the public morality? Is it expected of a Minister in relation to his the standard of behaviour in public life? I ask officers when such matters of public policy that question. That is the position. Mr. Deputy and such fundamental matters of public Chairman, therefore, the whole thing is so interest are involved. Nothing of the kind. shocking. It is Tiot that Mr. Mundhra took Some people say that you are very casual. away Rs. IJ crores. We can find that money. That casualness was there in the remark. We can recover that money from Mr. That is what I had heard. Therefore, the Mundhra, if you like, and we know •that Ministers should behave. They should not much money has gone down the drain. The always eat out of the hands of the officers. blow that has been struck •to public morality Well, the practice is every day growing. is also a very serious consideration in this Answers are given from the cramped notes, matter, and nobody bothered about it. If our and if the pad is not in their hands, they will Parliamentary democracy is sought to be not say anything. That position should go. fashioned according to the needs of As far as the officers are concerned, they Mundhras, according to the needs of must know that they are not answerable to discredited Ministers, then nothing will their remain in this country. This is what I say. As Ministers only. We have seen three or far as the other officer, Mr. Vaidyanathan, is four I.C.S, officers in this connection. There concerned, why he was kept, nobody, knows. also they are not as efficient or But this is how they run bureaucracy . . . as above board as is sought to be made out. Therefore, the officers must know from SHRI H. P. SAKSENA (Uttar Pra- now on that they are answerable to desh): Nothing will remain in this Parliament and to the public at large. If they country if—God forbid—my friend, are public servants, they must bear in mind Mr. Bhupesh Gupta's Party comes all the time, every moment of their into power. , operation, that ultimately, in the final analysis, they will be accountable to 59 R.S.D.—5 4047 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4048 IShri Brnapesh Gupta.] this House and the ter has come. I wish he were present earlier. I other House. (Time bell rings.) I am finishing would appeal to him. He is a very veteran in a minute. Then, Sir, about the other thing, politician and . . . the Union Public Service Commission, I ask why these I.C.S, officers should be given this extraordinarily kind treatment in this matter. MR. DEPUTY CHAIRMAN: That will do. An article, a provision in the Constitution is there that whenever it comes to a cfiiestion of SHRI BHUPESH GUPTA: . . . an able disciplinary action against them, the whole person. I would certainly request him not to thing has gone to the Union Public Service bring Mr. Krishnamachari by the backdoor. Commission, and when It comes to the other employees, they get discharged or dismissed without assigning any reason. (Time bell SHRI T. S. PATTABIRAMAN: Mr. Deputy rings.) Why this dual standard, I cannot Chairman, the great Mundhra drama is understand. Here we see how we Have been coming to an end and we are now in the landed by the U.P.S.C. The U.P.S.C, in epilogue stage. The Mundhra drama has been this'matter was an incompetent body. ,It could more tragic than many of the Shakespearean have assessed the punishment, but it was «n tragedies. Yet we are in the position of one incompetent body, I do maintain, from the who has seen Tagore's dramas—at the end we point of view of examining or going into the are left to draw our own conclusions. No deci- findings. Certainly, it was not a Privy Council sions or clear-cut indications have been given. reviewing decisions of certain High Courts of The Chagla Commission had its sitting in the British Empire. It is not like that at all . Bombay and it submitted its report. Later, the matter was referred to the Bose Board, which contained an eminent Supreme Court Judge, a MR. DEPUTY CHAIRMAN: .That will do. great, internationally respected senior civil officer and one of the seniormost civ^l officers, who is the Secretary of the Madras SHRI BHUPESH GUPTA: That is the Government. The Union Public Service position. When you say 'That will do', you are Commission, whose members fully deserve very right. I think I have said enough. I only our respect for their integrity, honesty and want to strike a note of warning and it is this: ability, considered it and the Government have Please do not make any attempt to rehabilitate come to the conclusions. This country and the discredited Minister as if nothing had Parliament owe a debt of gratitude to all the happened. The Mundhra scandal is an members of these august bodies for the abounding scandal, which shall continue, and fearless way in which they presented the facts for this scandal some people are responsible. and for giving to the public a neat picture. And among them Shri T. T. Krishnamachari is Tributes were paid to individuals in the drama undoubtedly the first and foremost, along with and I want to join in the tribute that is being Mr. H. M. Patel. Therefore, let there be no paid. brushing aside of this thing, because the Government has suffered in its prestige. Even the Prime Minister's prestige has fallen Sir, my friend Mr. Shiva Rao and my because of certain remarks he made and the venerable friend Mr. Sapru and others paid manner in which he treated this deal. I am great tributes to the great civilian Mr. Patel. very glad that the Home Minis- Let me also add my humble contribution to them. I only wish that the generosity shown 4049 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4050 by the hon. gentlemen had been extended to SHRI T. S. PATTABIRAMAN: Sir, I am the other civilian, Mr. Kamat, and Mr. thankful to Mis Sapru. I am en titled to say Vaidyananthan. It would have been that we in the Congress Benches have been in appropriate if they had done it. It is not the Congress not only as legislators but as accidental ihat they omitted it. It is fighters for freedom and agitators. We have intentional, as we will see from the U.P.S.C, come here as legislators after we have been report. fighters. Mr. Sapru is not entitled to claim the same experience as I can in the Congress. Whatever may be said by individuals and SHRI P. N. SAPRU: I did mention Mr. Members here and there, I am sure that the Kamat and I said that I thought his evidence country and the great Congress organisation impressed me most. are proud of Mr. T. T. Krishnamachari . . . SHRI T. S. PATTABIRAMAN: Sir, honest service has been rendered by these civilians SHRI P. N. SAPRU: He had no record of and they not only deserve the thanks but the service as a Congressman before he came. gratitude of the nation, and I shall not be lag- ging behind in giving them our gratitude and SHRI T. S. PATTABIRAMAN: I do not thanks. want to enteT into a controversy. Let us face facts. Sir, much has been said about Mr. T. T. (Interruptions.) Krishnamachari in this House. If the hon. MR. DEPUTY CHAIRMAN: Order, order. Members who made the accusations against Mr. Krishnamachari had confined themselves SHRI T. S. PATTABIRAMAN: I was born to the four corners of the reports before us, I perhaps much later than my hon. friend, but I should not have been worried. I am not here have always been a Congress worker and to defend Mr. T. T. Krishnamachari, because never a Government servants. That makes a Mr. Krishnamachari according to all respected difference to me. I have that objective view and accepted standards is capable of de- and it must be respected. fending not only this country but himself and the party, and he can and he will do it. But, Sir, I would like -the hon. Members to Sir, some Members went to the extent of pause and consider, and let them go through criticising him personally, and I very much the two thousand pages of evidence before the regret' to say that my respected and learned Bose Board and the Chagla Commission. I am friend Mr. Sapru, who is always respected for prepared to renew the challenge, Sir, the his wisdom, age and sobriety went to the challenge I made during the debate on the extent of saying that the Congress should not Chagla Commission Report. Let them produce defend him, and that the Prime Minister and here one single sentence—mark my words— the others were wrong. which implicates Mr. Krishnamachari, which says that Mr. Krishnamachari sent word to the SHRI P. N. SAPRU: I make a protest. I L.I.C, officials or directed Mr. Patel or asked never used those words. I would like my them to invest the L.I.C, funds in Mundhra words to be referred to. I never mentioned shares. Let them prove it. There is a lot of evi- the name of the Prime Minister. I never dence before them. There is absolutely no mentioned the name of the Congress. I said evidence to this effect. My respected friend that we should set standards in these matters, Mr. Shiva Rao said: "Here is a statement and I said that the impression that Mr. which Mr. T. T. Krishnamachari prepared in Krishnamachari's evidence creates in one's Bombay." mind is that he is not frank. 4051 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4052 [Shri T. S. Pattabiraman.] Sir, the I were pending go to Bombay, prepare a Chairman of the Bose Enquiry Board called it statement with the help of the advocate of the the Bombay draft. I will come to that, the L.I.C, to be put into the mouth of Mr. T. T. Bombay draft. . The first thing is, Mr. T. T. Krishnamachari and get him napping, as they Krishnamachari was examined the previous got him napping a few days earlier. Did Mr. day and the advocate for Mr. Patel did not Krishnamachari ask them to prepare it? Mr. have a word to ask him about it. Is it judicially Nehru is very certain about it: "To the best of correct? The Chairman, the great Mr. Vivian my recollection that is not correct." Bose, correctly pointed out "if you had this in your mind, then why did you not put it to Mr. "Mr. Chairman: Yes, we want a full Krishnamachari?" And for that reason only he answer. wrote to Mr. T. T. Krishnamachari, got his explanation and then refused to believe the Shri Nehru: Mr. Krishnamachari gave whole story. me no instructions about his statement."

Sir, let me come to the draft of Bombay Further on, which Mr. Shiva Rao made much of. Mr. B. K. Nehru himself does not know whether the "Shri Nehru: The basic point is that the draft is correct or not. My friend believes and only guidance that I had was not through Mr. swears, as if it is Bible. What does Mr. Nehru Krishnama-/ chari direct, but through this say as to what happened in Bombay? He says: conversation. "I went there, as far as I could recall, on the 17th morning with Mr. S. K. Kaul who was in charge from our side of the case Then we Shri Sanyal: Now, you have been shown prepared it." Sir, Mr. Shiva Rao said that the the Bombay draft and you say that you original is in the Library. This is what Mr. B. cannot swear that that was the draft actually K. Nehru had to say about it: prepared.

"There is no original. This is a document Mr. Chairman: Not actual which reads very much like that. As it is words, but he said, generally the draft several months now since I read it. I cannot may be the same." swear that this is the exact copy. The point is that the statement was prepared in 3, 4 or Sir, is this a draft to be believed? And what 5 copies. I had a copy. There is no does Mr. Krishnamachari say? He says in his signature and no original." letter to the Commission dated the llth June 1958: And yet my learned friend Mr. Shiva Rao says that this is the original. Mr. B. K. Nehru is not "I did not approve of the statement I sure of the content, but Mr. Shiva Rao is sure drafted a shorter statement myself. As to of the content. Whom are we to. believe? I the statement which I myself drafted, I leave it to the House. certainly had mentioned in it that the matter was referred to me by the Principal Again, Sir, who asked Mr. Nehru to Secretary. I do not however recollect prepare ,a statement? Did Mr. Krishnamachari whether I stated that he had referred it to request Mr. Nehru to come to his rescue? No, me on two separate occasions. I am also Sir. Four or five officials against whom reasonably certain that I had not mentioned charges in that statement that I had given my 'consent'. I have already stated before the Chagla Commission'*, etc. 4053 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4054

Mr. Nehru also says that Mr. Krishnamachari SHRI T. S. PATTABIRAMAN: Then, Sir, did not give his consent. with regard to the evidence of Mr. A. K. Roy and Mr. B. K. Nehru, Mr. Sapru wants us to Mr. Sapru wants me to believe the believe it. He asks, "Why should you not evidence of Mr. Nehru and Mr. A. K. Roy. believe Mr. Roy?" Shall I put to him a Sir, Mr. B. K. Nehru and Mr. counter-question—"Why should you not A. K. Roy are two of the greatest believe Mr. Mazumdar?" The argument of the civilians that the country can be Union Public Service Commission and that of proud of, but I do not think that the my friend run on identical grounds. Why? I gentlemen who said that they were will connect them later. Sir, the fact is that afraid of giving evidence while Mr. Mr. Mazumdar gave evidence. He is one of the seniormost Indian Civil Service officials. T. T. Krishnamachari was in office He is the most senior of the three. He enjoys paid any compliment to them. It was the greatest respect, and he has had longer a statement derogatory to their. ability experience of working under Mr. and integrity. (Interruption.) ,1 re Krishnamachari than the other two, and no fuse to yield. Mr. A. K. Roy and mention was made of his evidence in the Mr. Nehru are not afraid of the Minis whole of the report of the Union Public ters. If they are afraid of the Minis Service Commission. Is it just? Is it right? Is it ters and Deputy Ministers and Parlia proper? I ask the great jurist of the day, Mr. mentary Secretaries, they have no Sapru. It has not been done. Why has it been right to continue in the highest jobs suppressed? You may not believe it. Why has they are holding. (Interruption.) it been suppressed? What does Mr. Mazumdar say when he is examined before the Chagla MR. DEPUTY CHAIRMAN: Order, order. Commission? He says:

"We always record the fact that this has SHRI T. S. PATTABIRAMAN: There is been done and so on. Tn that particular one thing. Mr. A. K. Roy and Mr. case, my understanding is that I would B. K. Nehru knew these things before record that I said such and such, and I the Chagla Commission came into would not agree to it;" being. Why did they not volunteer? They could have had a sitting in He categorically states that everything will be camera. They could have given evi recorded in Mr. Krishnamachari's regime. He dence in camera. Nothing prevented is not a man who simply believes in oral them' from doing that. Mr. B. K. discussion. Then why was it suppressed? Nehru himself admits that Mr Kaul People were very much agitated, when docu- was present during the drafting. He ments and registers were suppressed. An and Mr. Kaul were present Jo make important piece of evidence has been the draft, and Mr. Kaul was examin suppressed and nothing can be raised against ed before the Chagla Commission. him. Can you give an argument against him? Was not Mr. Patel in the know of No, Sir. What about the other thing? The things then that the statement was Chagla Commission and the Bose Board of prepared? Why was it not put to Inquiry were not discusing the working of the Mr. Kaul that this Bombay statement Finance Ministry or of the Defence Ministry was not put to him? The truth is that or the relations between those people; the the Bombay statement, the Delhi whole inquiry was into the transac- statement etc. are the result of a fertile imagination of an able advocate at the time of enquiry and it never existed. This is with regard to the Bombay and Delhi drafts. Second ly

SHRI P N. SAPRU: He knows his job and he is a man of eminence. 4055 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4056 has always been someming in wining, is that [Shri T. S. Pattabiraman.J tion of the Life Insurance Corporation, what the relationship right? between the Life Insurance Corporation and Mr. Patel: Letters have gone, yes." the Finance Ministry was. Can you have better evidence on this than Mr. Patel? The What else do you want? There is no use of Principal Finance Secretary says that every saying that I have understood this, but not dealing, every instruction, every that thing or the other thing. correspondence to the Life Insurance Corporation— everything—has been Again, Mr. Sapru said that Mr. A. K. Roy recorded. Again I draw the attention of hon. knew everything. What does Mr. Roy say? He Members to Mr. Patel's evidence itself on says that when he met Mr. Krishnamachari on page 22 of Volume 13. the 25th . . . "Mr. Sanyal (the Solicitor General): Now, all that I am putting to you is this. SHRI P. N. SAPRU: There is no use Whenever a question of policy regarding contradicting you. You can quote or misquote investment arose there has been always me as you like. something in writing—is that right? SHRI T. S. PATTABIRAMAN: Sir, facts Mr. Patel: Well. I can only say, on the are unpleasant. It is very difficult to swallow few instances we have here." them when arguments fail. 'Naturally other things take place. I do not want to go into That is, with regard to the Life Insurance them. What is the evidence of Mr. Roy? Mr. Corporation. Roy meets the Finance Minister here on the "That is correct; that the communication 25th. Actually what is the conversation? This has gone from here of the views of the is the thing. Mr. Roy said that his impression was Rs. 80 lakhs. Even taking for granted that wishes of Finance Minister or the Ministry Mr. Krishnamachari knew of the whole thing, or myself by letter." what ig the impression of Mr. Roy? It is only Do you want further clarification when Mr. up to Rs. 80 lakhs. Sir, now the transaction Patel himself admitted that with regard to the has been proved to be one crore twenty-five dealings of the Life Insurance Corporation, lakhs and fifty thousand rupees. Are the hon. everything had been in writing? Why don't Members and others who spoke for Mr. Patel you believe him? What is the sanctity in the prepared to say that at least to the extent of Rs. evidence of Mr. Roy and Mr. Nehru? I ask 45 lakhs Mr. Krishnamachari was put in the this question. Mr. Patel himself has admitted dark and it was done behind him. I agree that this. Why don't you confront him with this Mr. Roy's evidence should be believed. What statement? Sir, the Union Public Service does he say? Commission, great, as it is, has tried to forget it and I do not know the reasons; and yet there His conversation is given: are hon. Members—members of a great organisation—I shall not attribute motives to "I said: 'Are you suggesting that this was them. done without your knowledge or concurrence?'" Then, "Mr. Sanyal: On the few instances given He asks Mr. Krishnamachari. Why should he here—in your statement and Mr. ask him? It is because he felt that Mr. Kamat's statement—there Krishnamachari was not 4057 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4058 in the know of it and Mr. Roy was not clear. SHRI BHUPESH GUPTA: What does What does he say? My hon. friend says that 'mumbling' imply in this case? He knows it Mr. Roy's evid-ence should be absolutely better. believed as a gospel truth. I shall believe him, Sir. MR. DEPUTY CHAIRMAN: Nobody interrupted you when you spoke. Mr. A. K. Roy: "I said: 'Are you suggesting that this was done without your SHRI T. S. PATTABIRAMAN: This is knowledge or concurrence?' At that time, what Mr. Roy has said. I do not want to go probably, it was time for him to go and he into the other pieces of evidence of Mr. Roy. got up and said: 'Mr. Patel mentioned it to He is. a great man; he is the Principal Finance me. There is something in your point of Secretary. And he says that the taxation view.' proposals are discussed and he says, "I have not put them in writing." Thank God, they are Well, that is all I remember about the not put in writing. And who announces it? conversation. But he mumbled something The Minister writes it down, reads it here, and and went away." why should it be recorded? Then he takes the Is mumbling part of evidence? 1 want to full responsibility. know that. I am just . . . (Interruptions.) I do not want to be interrupted. He mentioned about the Orlicons deal with which he was concerned. We are extremely SHRI P. N. SAPRU: I want to make it clear grateful to Mr. Roy. The Orlicons Machine that what I said was that Mr. A. K. Roy's Tool Factory deal was a big question. Who evidence shows that on the 25th or the 24th was responsible for the loss and whose Mr. Krishnamachari talked about this responsibility it was? Thank God, the Vivian transaction and on the face of it, there is no Bose inquiry has brought to light that it was reason to disbelieve Mr. Roy. Mr. the great Mr. Roy who made the Government Krishnamachari too has not denied that he had suffer. We are extremely thankful to Mr. Roy a talk with him. for having admitted that he concluded the deal without anything in writing. SHRI T. S. PATTABIRAMAN: This is what Mr. Roy said; Sir, then the question of Mr. Krishnamachari suppressing evidence on "His reply was—and so far as I can those two days; Members were saying that remember, the exact words were—'No, Mr. Krishnamachari suppressed the facts. Patel mentioned it to me' and then he What was the question on the 4th September, mumbled some words. I suppose 'There is 1957, Sir? They wanted some information. something in your point.' I cannot re- This is their exact draft, Sir. These are the member exactly, but I suppose he sad, exact words appearing in the draft answer "They are all right'. He mumbled something submitted to Mr. Krishnamachari. and walked out. I mean, I cannot tell you "It is understood that the Life Insurance exactly what those words were. He mum- Corporation has not invested, as stated in bled them and went out." the report referred to, a crore of rupees in any single private enterprise with head- Sir, Mr. Krishnamachari's mumbling is now quarters in Kanpur." being interpreted as *his having known'; Mr. Krishnamachari's "look into" is interpreted as Then there is a portion following it, which 'Do it', ls the word "Do' there? After all, was cut out by Mr. Krishnamachari, and it is; English is English and anybody. . . 4059 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 406O [Shri T. S. Pattabiraman.J "Shri Sanyal: It is item No. 13." "The report presumably had reference to "Shri Sukumar Sen: Starred Question the purchase by the Corporation of No. 1476?" preference and ordinary shares in a number of industrial concerns which were the pro- "Shri Sanyal; Yes. A portion of the perty of one individual Shri Hari-das answer is scored out. Is it 'unsound Mundhra. The total amount thus invested investment'?" was of the order of one crore and twenty- "Shri Patel: I think it is most likely; it five lakhs of rupees." should be 'worth while'." That is No. 1. and No. 2: Mr. Patel says that it was a worth while investment. My friend says that there was a "The purchase was effected because the drag in the Calcutta market and that Mr. Patel shares in question appeared to be an had to go to the rescue. Even on September 4 unthought investment." my great friend, Mr. Patel, does not admit that And No. 3: there was a drag in the market there. He says that the investment was sound, that Mundhra "Incidentally, the purchase assisted in shares were very sound. That is why they were averting a possible difficult situation on the invested in. He takes this-stand on September Calcutta Stock Exchange." 4 and he says, "Incidentally, the purchase assisted in averting a possible difficult These are the three parts cut out, first of all situation on the Calcutta Stock Exchange." about Mundhra's shares being purchased and See, Sir, how the entire argument and the secondly, about an 'unthought investment'. entire defence varied at a later stage, the Now Mr. Patel was asked, "Did you prepare variation in his evidence before the Chagla the statement?" Will any sane Secretary say in Commission and subsequently before the Bose the note that it was an unthought investment? Board of Inquiry, that he went to the rescue of And he wanted the Minister to admit it on the the share market. But on September, 4, for the floor of the House. It is not the Secretary that first time he says it is not for that. He invested is here, and he wants the Minister to admit it because it was a sound investment. as an 'unthought investment', and thirdly—Mr. Krishnamachari did not agree with it— Then, Sir, there is another suggestion that, I "Incidentally, the purchase assisted in averting think, my respected friend Mr. Kunzru a possible difficult situation on the Calcutta referred to, that the letter of Mr. Kamat dated Stock Exchange." Mr. Krishnamachari did not the 16th July was not placed. agree with this and because he did not agree with this thing he cut it out along with the two (Interruption.) other parts I quoted before. In this regard what I am sorry, Sir, but somebody mentioned does Mr. Patel say later? It is not during the here that the letter of the 16th July of Mr. hearings of the Chagla Inquiry Commission Kamat was not placed when the question but during the hearings of the Bose Board of came up before the House. (Time, bell Inquiry. Let us see what he says. I quote from rings.) the proceedings before the Bose Board of Inquiry: Another ten minutes, Sir. MR. DEPUTY CHAIRMAN: Two or "Mr. Chairman: What is your three minutes more. page?" SHRI T. S. PATTABIRAMAN: Now, Sir, ,1 had to meet . . .

4061 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4O62

MR. DEPUTY CHAIRMAN: Two 'Mr. Patel, on" his way to the United minutes more. Kingdom on the 29th June, told me that the Minister wanted to have a statement of the AN. HON, MEMBER: He has got an holdings in 'blue chips'. I asked him im- amendment, Sir. mediately what 'blue chips' meant. Well, he did not know. He said, perhaps, I could SHRI T. S. PATTABIRAMAN: Yes, there find it out from Mr. Vaidyanathan. I asked is my amendment. Mr. Vaidyanathan. Mr. Vaidyanathan did not know either, as to what could be Now, Sir, the letter, according to Mr. Kaul regarded in India as 'blue chips'." . . . So nobody knew what 'blue chips' were, and DR. H. N. KUNZRU: Never mind, take up nobody had the responsibility to ask the some other point. Minister what 'blue chips' were. If this is the conduct of those persons concerned, others can be easily imagined. Sir, I do not want to go SHRI T. S. PATTABIRAMAN: I am into the other matters. Mr.. Krishnamachari coming to the point, to every point that is has been vindicated s correctly; I have no doubt inconvenient to you and others. about it. It was said, Sir, that Mr. Krishnama- chari had intimate knowledge of the whole transaction and he must own responsibility. Now, Sir, Mr. Kaul says—it would Mr. Krishnamachari if at all he had, should appear—that this letter of Mr. Kamat dated have had knowledge either in Calcutta or in the 16th July was not placed on the file sent to Delhi or m Bombay. Let me go through the the Minister with regard to the question put on main evidence of Mr. Patel regarding Calcutta, September -4. But he prepared his note on the before the 'Bose Board of Inquiry: bass of that letter. When answering the Question on the 29th November that letter was "The Chairman: Was the Minister certainly put on the file, but not on the 4th present when this discussion took place?" September, where the Bose Board of Inquiry has made a factual mistake. There is nothing "Mr. Patel: I cannot say." near about it, and it is clear that if Mr. Krishnamachari did not g.ve the answer, he "The Chairman: Did you discuss with was correct in not giving the answer, because the Minister in Calcutta about the market he had no information—it was suppressed by being loaded with Mundhra shares and whosoever it may be—I do not want to name what its result would be?" anybody. Even for argument's sake let us take it that the letter was there. What did the letter "Mr. Patel: I do not think I had any contain? The letter contained only the mention discussion of a general nature with the of Jessop & Company. The letter dated the Finance Minister in Calcutta." 16th July from Mr. Kamath only referred to Jessops shares and to no other shares. In this connection, Sir, we must know that Mr. Then coming to Delhi, Sir, Mr. Krishnamachari himself did not know all Patel's evidence is as follows; these things. Mr. Kamat gives evidence. Then "Mr. Chairman: Now tell me, did you he says that Mr. Krishnamachari wanted have anything to do with the Minister on information about the blue chips, what were the 24th or 25th morn- the investments in them. Do you know what the civilian and all have done? Shri Kamat says: 4063 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4064 [Shri T. S. Pattabiraman.] ing? Did you m a court, I Would like to know that? Mr. report the result of the transaction to the Patel starts that Mr. Krishnamachari said, Minister after returning to Delhi?" "Look into it", this was at Bombay, and this was before the Chagla Commission. Then he "Mr. Patel: No." appears before the Bose Board, changes his position and says, "Why should I have done "Mr. Chairman: Did you see him after this if I had not had his approval?" Is this that?" evidence, Sir? He is shifting his ground. And again when preparing his statement and "Mr. Patel: I was extremely busy for the submitting it to the Union Public Service next few days, 24th to 29th, and I left for Commission he says, "The Minister knew all England on the 29th of this month." about it and that he had indeed given the orders that I should give the advice to the "Mr. Chairman; I take it that you had a L.I.C, which I did." discussion with the Minister between the 24th and 29th?" The first statement is to be believed and all other subsequent statemen' : have to be taken "Mr. Patel: I do not recollect having had with a pinch of salt. That is the common law any discussion with the Minister." and I am sure you will agree with it.

"Mr. Chairman: Not even in Delhi?" Sir, I would like to wind up my speech with only two remarks regarding the U.P.S.C. The "Mr. Patel: I had no discussion before I Union Public Service Commission deserves went to England." our thanks and congratulations for the effective manner in which they have put the case. But there is one thing. Sir, I am sorry, Now, Sir, if Mr. Krishnamachari had the and I cannot accept that position. A few days knowledge of it, if Mr. Krishnamachari had an after the matter was referred to the U.P.S.C, by inkling of a doubt that the Mundhra shares had the Government it was the common talk in the been purchased by the L. I. C at such a cost, fashionable clubs of Delhi wherein civilian would he not have asked Mr. Patel—Mr. officials of the India Government meet—the Krishnamachari was reputed to be a very bold Government and the Ministers cannot do and dashing man—would he not have asked anything—that Mr. Patel was going to be acquitted. Sir, the Tribune of Ambala and Mr. Mr. Patel to tell the position? He would have Salwatti's letter from Bombay published asked Mr. Patel to report and explain why it categorical news that the Public Service had been done. Then, Sir, that is what exactly Commission had come orally to the conclusion happened in Bombay. It is amazing how Mr. that Mr. Patel would be acquitted. I will not Patel, starting from the position that his say much about it. Sir, firstly, the integrity, the 'impression was that the Minister had prestige of the Union Public Service approved', shifts his position to 'Why should I Commission has been affected. Secondly, have done this if I had not had his approval'. when the Public Service Commission sends its In Bombay the Minister said, "It might be report to the Government, it is of a confiden- looked into." But Mr. Patel purchased them. tial nature. There are only two ends to the My friends and all those Members who whole road between Central Secretariat or spoke—many of them are advocates, legal King Edward Road, now Maulana Azad Road, luminaries—may see how the ground is and Shah-jahan Road. The Prime Minister shifted. Will they believe the evidence if they had had been sitting 4065 Lt/e Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4066 stated categorically that it did not leak at this Wait a minute, please. I am not yielding. end. Then at which end did it leak? And on the same day the Report was sent to the SHRI BHUPESH GUPTA: Only a Government, it was published in full in all the correction. I mentioned . . . papers. I do not blame the Public Service Commission for it. Not only the Commission, SHRI T. S. PATTABIRAMAN: I am not about whose impartiality we have no doubt, yielding. but also the office should be above suspicion, MR. DEPUTY CHAIRMAN: Order, order. as it has given cause for suspicion in this case. In public interest I want that an enquiry SHRI T. S. PATTABIRAMAN: I am should be made to find out who is responsible finishing now, Sir. Mr. Bhupesh Gupta's party for this leakage and how it leaked out. Finally, knew Mr. Mundhra in 1957. In 1957 he knew Sir, there is one thing and I am finishing. Mr., Mr. Mundhra. He knew the antecedents of Bhupesh Gupt^ and other Members were Mr. Mundhra. In 1957 during the Puja Day saying that the Congress Party has been Celebrations at the residence of Mr. Mundhra, benefited and the deal was a quid pro quo for Mr. Jyoti Basu, other Communists and the benefit that accrued to the Congress. Mundhra hugged together and ate sweets and exchanged greetings. SHRI BHUPESH GUPTA: I did not . . . (Interruptions.)

SHRI BHUPESH GUPTA: I never went SHRI T. S. PATTABIRAMAN: Will you kindly allow me, Sir, to proceed? The there . . . Congress does not need the money; when it SHRI T. S. PATTABIRAMAN: If Mr. has the goodwill of the masses in this country Mundhra had been bad, why should they have it does not need money. Sir, but in fairness to been hobnobbing with him? Mr. Gupta Mr. T. T. Krishnamachari and the Congress admitted to me privately about this allegation organisation, why did not Mr. Justice Vivian . . . Bose put this question to Mr. T. T. Krishnamachari, "Mr. Krishnamachari, did (Interruptions.) you do this just because the Congress organisation was given donations by Mr. SHRI BHUPESH GUPTA; Sir, I strongly Mun-dhra?" That would have cleared the repudiate it. It is a blatant falsehood that the way. A man should not be convicted without hon. Member is uttering. I cannot allow him a hearing and without his being given a fair to say so . . . trial and without a reply from him. A great organisation has been condemned without a MR. DEPUTY CHAIRMAN: You sit hearing and without any evidence, and we down. regret that it has been done by one of the great Supreme Court Judges in India. We are sorry SHRI BHUPESH- GUPTA: On a point of for it. personal explanation.

SHRI T. S. PATTABIRAMAN: I made this Mr. Bhupesh Gupta was accusing the allegation during the Chagla Commission Congress of all these things. Mr. Bhupesh Report discussion and even now I stand by it. Gupta's memory is not always sharp. In 1957 he knew Mr. Mundhra. He is a very bad chap MR. DEPUTY CHAIRMAN: That will do, according to him. Mr. Pattabiraman. T (Interruptions.) SHRI T. S. PATTA B r> A M AN: Tht Communists have no right to criticise us because they are pals, friends enc 4067 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4068 [Shri T. S. Pattabiraman.] best friends of THE MINISTER OF HOME AFFAIRS Mr. Mundhra. So far as we are concerned, Mr. (SHRI GOVIND BATXAIIH PANT): Mr. Deputy Mundhra has benefited and if at all 'one Chairman, I do not think I need take much person is blamed, it is one person, Mr. Chatur- time of the House at this late hour. This vedi, the President of the Calcutta Stock discussion has been going on for the last Exchange. He is the arch or prime architect of five hours but it is not the first time that this the whole deal. He meets Mr. Mundhra, he question has come before this august. meets Mr. Patel, he meets Mr. Iengar, he House. We have had three debates in meets Bhattacharyya, he does everything. Parliament over this fateful transaction. It Why did he take so much philanthropic gives me some relief to think that this interest in Mr. Mundhra? It is a worth-while episode is now almost coming to an end. matter for the Home Ministry to completely enquire and find out what was his m'otive. With these few words, I propose that my Sir, at first when this matter was raised in amendment be accepted. the Lok Sabha, the then Finance Minister offered to appoint a Commission of Enquiry SHRI BHUPESH GUPTA: On a point of for going into-the whole affair and he selectel personal explanation . . . Chief Justice Chagla for that purpose. The proposals made by that Commission were then MR. DEPUTY CHAIRMAN: The Home discussed in both Houses of Parliament and Minister. certain Resolutions were recorded and SHRI BHUPESH GUPTA: I have to give a directives given to-the' Government. In personal explanation. I am here on this side. accordance with the directives given by the You are ^o allow me. A personal explanation Parliament, a Board of Enquiry wn-j thereafter is allowed. Otherwise you expunge it . . . appointed to look into th-3 conduct of the officers who were concerned with this deal. MR. DEPUTY CHAIRMAN: If you make So it was under the orders-of the Parliament allegations, you will hsve 1o accept the itselt that this Board of Enquiry was allegations made by others appointed. The terms of the Board of Enquiry were framed just in accordance with those SHRI BHUPESH GUPTA: I rise on a point directions. As hon. Members know, the Board of order. You are, under the rtules, required to of Enquiry was appointed' under Rule 5 of the allow me the chance yf personal explanation. All-India Services (Appeal and Investigation) Rules. The Board was presided over by Mr. MR. DEPUTY CHAIRMAN: What is he Justice Vivian Bose. Th° Board had before it personal explanation? certain charges framed by Government against the officers concerned, and it was asked to SHRI BHUPESH GUPTA: A few vords. look into them. As it has itself noted in its Half a minute. I never want mnecessarily to report, the Board had nothing to do with any create heat. I never, lever, never told him that other person except the officers into whose I had ever net Mr. Mundhra anywhere. behaviour in this matter it .vas asked to look SHRI T. S. PATTABIRAMAN: I lever said into. The Board made a thorough investigation that. and after it had completed its enquiry, it gave its findings. According to the Board Shn Patel MR. DEPUTY CHAIRMAN: He lever told was found guilty of two out of the four that. You told him . . . charges and Shri Kamat w;:s similarly found guilty. So was Mr Vaidyana-| than. On the SHRI BHUPESH GUPTA: In point f fact, basis of the proposals.- Mr. Krishnamachari and he lust have met, Being a friend of his. have never seen his face. 4069 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4070 made by the Board, th.? m:i

SHRI GOVIND BALLABH PANT: After he was walking out of a meeting Mr. T. T. the report? Krishnamachari was not given any facts or figures. Nor was he told about the drag. In DR. H. N. KUNZRU:. Yes, after the report, fact, there is no evidence to indicate that the and that is why the Minister concerned drag was even mentioned before him, and resigned. he was not given any data on which a reasonably cautious man would be expected to reach a policy decision of importance." SHRI GOVIND BALLABH PANT: Yes, I 'said the Minister concerned resigned before the report was discussed in Parliament and so I have excluded some unnecessary sentences the occasion for discussion did not arise. which did not affect this one way or the other. And I may also submit that there are reasons DR. H. N. KUNZRU: No, no. givpn in extenso. in Mr. Pillai's Minute of Dissent. I understand that a sort of criticism SHRI GOVIND BALLABH PANT: That is was made in this" House that we ought not to my information. I may be wrong and I would have referred to Mr. Pillai's Minute of Dissent take whatever Dr. Kunzru says in that respect in our Resolution. I do not know how we could as representing the correct position, because ignore it. If it had come to us from the he is certainly better informed than many of us U.P.S.C, we had to take into consideration the in these matters, at least much better informed Report as well as the Minute of Dissent that than myself, I cannot say about others. I would came' from the same authoritative body. In that take his word and be guided by him in these Report there are reasons given why Mr. Pillai matters. reached a different conclusion. I shall just read out something from a page: I think from the outset it has been accepted that this deal was an unfortunate one. The 'The fact that Shri Patel has taken the impropriety and the unbusiness-like character initiative and a dominant part in the whole of this transaction have been accepted affair and rushed it through is apparent from throughout. We should, however, bear in mind the following questions put to Shri Patel that it was not a direct concern of the Finance and the answers given by him: Ministry itself. The Corporation had an inde- pendent and statutory existence of its own and "As for Shri Patel, he was asked whatever was done had to be done by the during the present enquiry whether he Corporation. How did this deal come about? I called all these people together for these think it is at least to a large extent accepted by meetings and he said, 'Yes'. Then he was all concerned that the initiative was not taken asked: by the Minister, that the full facts were not disclosed to the Minister, that, the Minister did 'You took the initiative.' and he not take any interest in it, that he was casually said 'Yes'." Thf next question was: and incidentally spoken to in Bombay, I think, twice regarding this matter; these are perhaps "You took the dominant part in all accepted by all. I would just read out some the negotiations. All the letters were portion from the' Report of the Vivian Bose written to you. One would have Board. It says: thought that you would just hand over the "Even if you accept Mr. Patel's version, we find that this important matter was sprung on the Minister in a very casual way, just as 4073 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4074 jptters and say: 'Look here, I do not T. T. K. being not to blame in this matter see anything wrong. You just make up directly or indirectly, some questions were put your mind about it.' Instead of that, in this House indicating that the Commission you go on making all the alterations would perhaps be prejudiced in consequence and do everything. Is not that taking of the remarks made by me. I am really an undue part?" pleased to find that the Union Public Service Commission has been vindicated. It gave its Shri Patel answered: own opinion which was different altogether "That is how it would appear. I can from the view indicated by me about other only say that it :s because that is how I persons though that case was not directly had been accustomed to work all these before the Commission. So, I have no desire years. I have taken on and done a great to enter into the relative merits of different many things which have been outside individuals. I am sorry that this transaction my sphere; for instance, if I may and this deal has cost us the services of a mention, even as Principal Finance talented Minister and a very able and Secretary, I was appointed as experienced civil servant . . . Chairman for running and organising SHRI BHUPESH GUPTA: When are the Dandakaranya Scheme, something they coming back? wh:ch has nothing to do with finance or anything of that kind. I agreed to SHRI GOVIND BALLABH PANT: . . . one that and I took an active interest as if I who devoted himself to the service of the was a whole-time officer. I have no country according to his lights and who tried explanation to give except that it is in to do whatever came within his sphere or even my nature;/if I want that something is whatever he thought was in the interests of the to be done, I would like to see that it is country vjith complete devotion and in a spirit pushed on and done as quickly as of dedication. So, I have regard and respect for possible."' both, I also feel the necessity of maintaining the morale of the public services. . No DR. H. N. KUNZRU: Does the Home Government can function unless it has the Minister find nothing of importance in the wholehearted co-operation of the members of Report of the Union Public Service the services. The Union Public Service Commission to read to the House? Commission, therefore, holds a key position in SHRI GOVIND BALLABH PANT: I had the administrative system but, all the same, thought that the major report of the Union though we do invariably accept the advice Public Service Commission had already been given by the Union Public Service Com- reviewed and referred to in this House by mission, ultimately the responsibility rests on Members abler than myself. So, I thought that the Government itself. We have taken this I had better draw attention to what had decision because of some of these factors to which I have referred, that is, we could not say perhaps remained unmen-tioned so far. that any officer who was involved in this So far as the report of the Union Public matter was completely free from blame and Service Commission itself goes, I am glad that whatever view one may take of the part taken the bona fides of the Commission have not by him or the part that may have been taken been questioned here. I attach great import- by the then Finance Minister, the fact remains ance to the position that the Commission that this deal was not carried through in the occupies in our administrative system and proper manner, it was not carried out in when I had made certain statements in accord- Madras about 4075 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4076 [Shri Govind Ballabh Pant] ance with the penalty. When there is no mala fides and rules and regulations, the rules were not there are only errors of judgment, I think the observed and lhat the dominant role was case should be looked at from a different played by the then Finance Secretary. These angle. are all accepted. In the circumstances, ¥e felt that it would not be proper for us to accept Mr. Shiva Rao made a fine speech this the advice of the Commission in full. We morning. He posed three problems which he found out a course which did not do any harm thinks deserve attention; one relates to these to the ex-Finance Secretary, which course matters which do not involve any mala fides also to some extent took into account the and how they should be handled. I do not nature of the transaction and the way it had know if that requires any special attention. been carried out. Whenever there is a complaint and the complaint is prima facie correct, it has to be Some references had been made Tiere referred to a board of enquiry or to a to a certain draft, that is in the library and Committe? or to an individual enquiry to some other matters also. Reference officer. was also made to ihe evidence of some public servants. "Well, no reference has been When the report of the committee is made to them in the findings of the received, and it says that the transaction was Bose Board Report and 1 do not think it altogether bono fide, that though the man would be proper to place much reliance on might have erred, he had not done anything documents on which the person who is wrong, then it is for the government to see sought to be criticised was not asked to whether the proceedings should be pursued express his own view. He has not been further or whether they should be dropped. confronted with this document and it is an In all likelihood a lenient view is taken ordinary rule of law that unless one is where the bona fides are fully proved and asked to explain what a document nothing serious has been done. really means, whether it is genuine or not, it should not be taken into consideration against him. Sir, there are other matters relating to the relations between the Civil Servants and the Government. As I stated a minute before, There was reference to the evidence of the relations between the two should be another civil servant, a man of high integrity one of whom we all respect for the patriotic part he ! complete trust and mutual confidence so that played especially in difficult times. Even that evidence has not been given any special they may function smoothly and they may credence by the Bose Board. So far as this through their collaboration achieve the best enquiry matter is concerned, we feel that it of results. So there need be no would not T)e proper for the Parliament to go misunderstanding on that point. As to the into details about individuals, as to what. A relations between the Secretaries and the said, what B said or what C said. These are Ministers, there again should be complete things which can be argued in a court of law confidence and we are just looking into the but not in an august House like this where matter to find out if it is desirable to frame larger issues have to be considered and ' rules to regulate matters which come before solutions for such issues have to be found out. the Ministers. That is a question which will The main point which has to be borne in mind be given further consideration. by everyone is this. Some people blamed us for not imposing a severer I am glad particularly, Sir, that the U.P.S.C, have been rehabilitated fully here and that its prestige has been fully restored though there were 4077 Life Insurance [ 11 SEP. 1959 ] Corporation Inquiry 4078 some—I won't say innuendoes or goes, not a single witness had said that any insinuations—observations made sometimes money was given to any person in return for in unguarded moments by people suggesting any favour done by him. In fact, Mr. Patel that the Commission had not functioned in a himself said that he was not aware of it. He satisfactory way. I will say that the task of the had no knowledge of it. Not a single soul has Commission is a very arduous and difficult said that there was any occasion on which any one. It has to select ' three or four candidates money was advanced to any person in order out of 1,000, 2,000 or 3,000 candidates. All that he may later help the Government or that those who are disappointed of course have the Government rendered assistance- to hardly any desire to say a good word or to anyone by way of quid pro quo for the help compliment the Commission for leaving them that they had been given previously or for the out. Those difficulties have to be borne in consent given for keeping a mill running mind and I personally think that the instead of closing it. Every day we have to Commission has b^en doing its difficult job in deal with these matters and we have to a very honest and fair way. I may also add persuade the management and the people in that so far as this particular matter is con- charge to keep mills running to make the cerned, the difference between the maximum use of the installed capacity so that Commission and the Government Resolution there may be no loss and specially there may is not a very material one. So while not be no unemployment. 2,000- or 3,000 accepting the reasoning of the Commission labourers were employed in this mill and if it because of some of the matters to which I had been closed abruptly, there would have have referred, we have accepted the been many serious problems which would recommendation of the Commission fully. I have arisen and to make such remarks is, I am sorry that Mr. Bhupesh Gupta could not should say, hardly fair and it is not desirable resist the temptation of referring to what has that these things should be repeated here or been called the 'Assistance Theory'. It has elsewhere. After all decent standards have to been suggested by ihe Vivian Bose Board; not be maintained in public life and unnecessary that it has been proved, but they say that such suspicions should not be aroused which will a thing comes to their mind that this j may lead to some sort of lowering of standard? ali have been because of the assistance rendered over. As hon. Members are aware, under the by Mr. Mundhra by giving his consent to keep new Bill wliich is perhaps under the Kanpur Mills running and not closing it. consideration, all contributions made by As I submitted elsewhere, nothing could be companies are to be published openly so that more fantastic; nothing could be more absurd. there may be no secret deals of any type. The Congress Party have collected and does Aga'n we have to remember that this collect subscriptions from the poor as also transaction took place soon after the Socialist from the rich. So does every party. I would Budget of 1957 was adopted by Parliament like to know if there is one who does not and new taxes such as Wealth Tax, accept any money from the industrialists. In Expenditure Tax etc. were levied which hit the fact, some of the statements that were made in industrialists and others hard and which were recent months about a particular party which of a noveJ character. In spite of all this, tc had e^se association with one of the State attribute any motive like that is verj Governments indicated that the position could regrettable. I would not use s stronger have been much more difficult than it is or expression. than it has ever been. So it is not proper to refer to such matters. So far as the evidence 59 RSD.—6 I do not think I need take more o your time. We have had enough dis 4O79 Life Insurance [ RAJYA SABHA ] Corporation Inquiry 4080 [Shri Govind Ballabh Pant.] cussions. I two charges that the Bose Board supported have spoken I think five or six times in the ..." ... and they "consider that taking into two Houses over this particular affairs. So I account all the circumstances of the case, he thank the hon. Members for their indulgence should be exonerated of the charges framed and for allowing me to speak for the last 40 against him." minutes. Speaking for myself, I should have been MR. DEPUTY CHAIRMAN: Mr. happy if the Minister had accepted without Shiva Rao, any reply? any reservation this last recommendation of the Commission. SHRI B. SHIVA RAO: I had agreed not to exercise my right of reply, but if you will On the amendment I propose to abstain. permit me to speak from here I will just say a few sentences. My first remark is in regard to MR. DEPUTY CHAIRMAN: I am putting the speech that was made by my hon. friend, the amendment to the vote of the House. Mr. Pattabiraman. I do not mind the other This question is: observations that he made, but it did distress That . . . me a great deal that he should have thought fit to make a serious charge against the SHRI V. K. DHAGE: Sir, I wish to make it Secretary of the Finance Ministry and clear that we are abstaining from voting. mention him by name. I think it is only fair SHRI BHUPESH GUPTA: Because of the that he should either withdraw that remark; or farcical action of the Government and the if he has the courage, he should repeat it U.P.S.C, we want to abstain from voting. outside the House. MR. DEPUTY CHAIRMAN: You remain So far as the Home Minister's speech is neutral. concerned, may I say that it encourages me to think tbat the general points that I raised (Interruptions.) in the course of my speech this morning will Order, order. receive the serious and sympathetic attention of the Government. SHRI BHUPESH GUPTA: There will be no record to show abstention if the amendment is So far as this case is concerned, I would accepted. Therefore, I say that the abstention say that those of us who took part in the should be recorded. There is a provision for debate today and quite a number of others abstention. who did not speak, feel that the majority view cf the Commission should have been MR. DEPUTY CHAIRMAN: You may accepted by the Government. I shall read remain neutral. I do not force you to vote. There is no provision to record abstentions. only two sentences, because those sentences There is not a single "No'. represent our views. The first is that in the opinion of the Commission, "Shri Patel's DR. H. N. KUNZRU: But what we have conduct was not only free from blame, but said will be on record. was in the due discharge of the duties of his position." And I also refer to the last sentence SHRI BHUPESH GUPTA: So, we say that in the Report of the six Members of the we remain neutral. As to why we have remained neutral will be on record, in the Commission, namely, "that no blame proceedings of the House. attaches to Shri Patel in regard to the matters referred to in Charges I and II;" those were MR. DEPUTY CHAIRMAN: What you the only have said will be on record. 4081 Message from [ 11 SEP. 1958 1 ihe Lok Sabha 4082 SHRI BHUPESH GUPTA: It should be received from the Lok Sabha, signed by the recorded as in protest against the action of the Secretary of the Lok Sabha: Government and the U.P.S.C.

MR DEPUTY CHAIRMAN: It will all go "I am directed to inform Rajya Sabha on record. I am putting the amendment to the that Lok Sabha at its sitting held on Friday, House. The question is: the llth September, 1959, has adopted the enclosed motion concurring in the recom- "That at the end of the Motion the mendation of Rajya Sabha that Lok Sabha following be added, namely: — do join in the Joint Committee of the 'and having considered the same, this Houses on the Orphanages and other House records its approval of the said Charitable Homes (Supervision and decisions concerning Shri H. M. Patel Control) Bill, 1959. The names of the and Shri G. R. Kamat'". members nominated by Lok Sabha to serve on the said Joint Committee are set out in The motion was adopted. the motion. MR DEPUTY CHAIRMAN: I am putting the amended motion. The question is: Motion "That the decisions of the Government of India on the findings of the recent inquiry into certain affairs of the Life "That this House concurs in the Insurance Corporation as embodied in recommendation of Rajya Sabha that the Government Resolution No. F. 15/58-HS, House do join in the Joint Committee of dated the 27th May, 1959, be taken into the Houses on the Bill to provide for the consideration, and having considered the supervision and control of orphanages, same, this House records its approval of the homes for neglected women or children said decisions concerning Shri H. M. Patel and other like institutions and for matters and Shri G. R. Kamat." connected therewith by Shri Kailash Bihari Lall, made in the motion adopted by Rajya The motion was adopted. Sabha at its sitting held on the 4th Septem- ber, 1959 and communicated to this House MR. DEPUTY CHAIRMAN: There is a message . . . on the 7th September, 1959, and resolves that the following members of Lok Sabha SHRI BHUPESH GUPTA: Will the Home be nominated to serve on the said Joint Minister make a 'statement regarding the Committee, namely:— oplice firing in Calcutta? 1. Shri Asoke K. Sen MR. DEPUTY CHAIRMAN: Order, order. 2. Shri R, M. Hajarnavis There cannot be any statement now. There is 3. Shri K. V. Ramakrishna a Message from the Lok Sabha. Reddy 4. Kumari Maniben Vallabhbhai Patel • MESSAGE FROM THE LOK SABHA 5. Shri B. L. Chandak 6. Shri S.. A. Agadi THE ORPHANAGES AND OTHER CHARITABLE 7. Dr. N. C Samantsinhar HOMES (SUPERVISION AND CONTROL) BILL, 1959 8. Pandit Mukat Behari Lal Bhargava SECRETARY: Sir, I have to report to the 9. Shri Ansar Harvard House the following message 10. Shri Bhagwan Din 11. Shrimati Renuka Ray